Nairobi bourse gears up to sell 38pc stake

By Duncan Miriri

The Nairobi Securities Exchange (NSE) will sell up to a 38 per cent stake in an Initial Public Offer (IPO) by the end of next month to raise funds for new products and enhance transparency, its chief executive said.

Chief Executive Officer Peter Mwangi said the owners of the bourse, a mutual company held by brokers, will offer up to 81 million shares of Sh4 ($0.05) each, amounting to 38 per cent of its total capitalisation, subject to requisite regulatory approvals.

However, the IPO advisers are to set the actual offer price at a later date. “We want to list through an IPO on the main market. We need to open this listing before June 30,” he told Reuters. “That conversion from a private to a public company will position us to be a very effective player,” he added.

 Sub-Saharan Africa capital markets have been attracting rising investment from outside the continent as investors chase higher returns.

“We are playing in a sweet spot where the frontier funds think Africa is rising. East Africa is a hot spot on the African map and we are the gateway into that east African region,” Mr Mwangi stated.

Regional integration has been driving expansion among locally listed firms and the discovery of oil and gas across east Africa in recent years has also bolstered investor confidence. NSE’s pretax profit more than doubled to Sh379 million last year from 2012, lifted by a surge in trading turnover after the country’s presidential election passed off peacefully in March.

Mwangi said part of the funds raised in the offer would be used to bankroll new products like derivatives, exchange-traded funds and Sharia-compliant indexes.

Final approval

Plans to offer currency and interest rates futures and options are at an advanced stage with the regulator Capital Markets Authority perusing them for a final approval.

“We are seeing more and more international investors who might want to invest in Kenya and they might want to hedge the currency risk,” the chief executive said.

Kenyan banks offer foreign exchange forward contracts, which are negotiated directly with buyers, but they cannot be traded. The NSE futures market will offer standardised contracts for currency futures that will be traded.

Mwangi said they wanted to attract more listings on the NSE’s Growth Enterprise Market (GEMS), which targets small firms wishing to list their shares.—Reuters