Should Someone Take a Loan at 14%+ Interest to Buy the KPC IPO?

Short answer: NO — not advisable.

Here’s why, in simple investor terms 👇

Cost of the Loan vs Return From KPC

If you borrow money at 14%+ interest, your investment must reliably earn more than 14% per year just to break even.

Now compare that with KPC:

• Expected dividend (FY2024): ~KSh 0.35 per share
• Dividend yield at IPO price (KSh 9): ~3.9%
• Even optimistic yield: ~5%

👉 Dividend income is far lower than loan interest.

You would be losing money every year while waiting.

Limited Upside on Price After Listing

KPC is:

• A utility-style stock
• Already fairly priced at IPO
• At a similar price level to peers like KenGen

Expected post-listing behavior:

• Possible short-term excitement
• Likely high supply due to low entry price and affordability
• Price may stagnate or pull back after listing

👉 This is not a stock designed for quick capital gains.

Low Entry Price = High Supply Risk

Because:

• Minimum investment is very low (around KSh 900)
• Many retail investors can apply easily

After listing:

• Many small investors may rush to sell
• This can suppress price growth in the short to medium term

👉 Borrowing to buy a stock with high post-listing supply risk is dangerous.

Dividend Is Not Attractive for Loan Financing

KPC dividend is:

• Stable
• Predictable
• But LOW

This stock is:

• ✔️ For capital preservation
• ✔️ For steady income
• ❌ Not for high dividend seekers
• ❌ Not for leveraged investing

👉 Using debt for low-yield stocks destroys compounding.

Who KPC Is Actually Good For

KPC makes sense for:

• Investors using their own cash
• Long-term holders
• Small, gradual accumulation
• Investors seeking stability, not excitement
• Those comfortable holding for many years

It may become more attractive later when:

• Demand rises
• Inflation improves cash returns
• The market reprices infrastructure assets

Better Alternative: Quality Stocks (No Loan)

If someone is considering borrowing to invest, a better strategy is:

• Don’t borrow
• Or invest only in high-quality stocks with:

• Strong growth
• Higher dividend yields
• Better upside potential

Examples (conceptual, not recommendations):

• Strong banks
• High-ROE companies
• Stocks with proven dividend growth
• Undervalued quality names during market dips

👉 Even then, borrowing to invest is still risky and should be avoided by most retail investors.

🔑 Final Advice (Very Clear)

• ❌ Do NOT take a loan at 14%+ to buy the KPC IPO
• ✔️ Only invest money you can afford to lock away long-term
• ✔️ Treat KPC as a slow, stable utility stock
• ✔️ Focus on quality stocks for better risk-adjusted returns

⚠️ Important Reality Check

Most people selling the idea of loans have targets to meet.

They are friendly when you borrow, but often become your worst enemies if you default.

They don’t lose — you do.

Debt has ruined more lives than bad stocks ever did.

🧠 Borrowing to invest in low-yield, low-upside stocks is a wealth destroyer, not a builder.