NSE lines up new listings to end drought

NSE Chief Executive Mr. Geoffrey Odundo shares an analysis of market performance in 2018 and insights on market outlook for 2019. [Photo: Standard]

The Nairobi Securities Exchange will today host the first company under its incubator programme as it moves to end a prolonged listing drought on the bourse.

Under the Ibuka (Swahili for emerging) incubation and acceleration programme, NSE targets small and medium enterprises (SMEs) with the potential for high growth in the near to medium-term.

Ibuka is a non-trading bourse which NSE believes will help SMEs understand the way listed companies operate.

The programme targets companies looking for immediate visibility and whose intention is to list through the capital market.

Speaking during the unveiling of the NSE outlook for 2019 in Nairobi, Chief Executive Geoffrey Odundo said the listing of the yet-to-be-named company would open the way for the 19 others that are expected to join the programme before the end of March.

“That is going to be a big thing for us. In fact, it is one of the ways to create uptake,” said Mr Odundo.

Family-owned retail chain Tuskys, investment firm Cytonn and vehicle and equipment leasing firm Vael are some of the companies lined up for the programme.

Odundo highlighted lack of understanding of the market, anxiety around regulations and the cost of compliance as key factors that discourage listing. Besides bringing on board the 20 firms under the Ibuka programme, NSE’s to-do list this year includes plans for initial public offerings (IPOs) of some of the country’s major firms, injecting much-need liquidity into East Africa’s leading securities exchange.

“Still on the listing, this is the year we want to focus on getting IPOs in a big way,” said Odundo.

“We are engaging with all the companies that have expressed interest to do an IPO. These include National Oil later in the year, Tuskys, among others.”

By the end of June, the derivatives market will become operational, adding to the number of recent arrangements, including exchange traded funds (ETFs), REITS (real estate investment trusts) and mobile bonds.

Last year, the capital market performed dismally, with the equity turnover declining by 27 per cent by December while bond turnover fell by 48 per cent.

NSE 20, the benchmark index declined from a high of 5113 in 2014 closing 2018 at 2801.

Foreign participation, which fell by four per cent, is not likely to improve, with analysts attributing the tightening of global financial conditions. A fractious Brexit agreement and the trade spat between the US and China are other factors that will impact foreign participation in the capital market.

Odundo noted that with 40 per cent of NSE being dominated by foreigners, Kenya’s capital market was bound to be hit by the global crisis. Last year, NSE made two listings - the additional shares of Britam and Bank of Kigali, which cross-listed on the Kigali and Nairobi bourses.