Companies targeted in the plan are majorly those listed at the Dar es Salaam Stock Exchange (DSE) and the Uganda Securities Exchange (USE).
The Nairobi Securities Exchange (NSE) is targeting companies from Tanzania and Uganda in its 2019 plan to revitalize the Nairobi bourse, as it moves to end an Initial Public Offering drought which has entered its eleventh year.
NSE chief executive Geoffrey Odundo has confirmed that the self listed company is keen to lure companies from the region into listing in Nairobi.
Companies targeted in the plan are majorly those listed at the Dar es Salaam Stock Exchange (DSE) and the Uganda Securities Exchange (USE) which according to Odundo, NSE is keen to encourage them to cross list on both bourses.
The plan also includes Rwanda and not limited to listed companies. Sectors eyed by the Nairobi bourse include the financial sector, infrastructure and service sectors.
“A lot of companies in the East Africa region are looking for capital to expand their businesses. We are working with our partners through the East Africa Exchange Association to encourage investments,” Odundo said during this year’s NSE market outlook update.
The regions’ bourses will be converging for the first time at the East Africa regional capital markets day in May, which will bring together all the securities exchanges.
“We will be having a platform that will give companies the opportunity to understand what goes on in Kenya, Uganda, Tanzania Rwanda. We will be able to engage in one platform where one will be able to talk to investors, advisors, exchanges and companies. The meeting will provide an opportunity for companies see the markets to go to,” Odundo said.
NSE has dismissed fears that the plan to bring on board companies from the region will affect their respective markets.
“We are not out to destabilize the markets but instead we want to strengthen the market and allow investors to invest across the region,” Odundo affirmed even as he fronted Kenya’s market incentives which are more attractive compared to her peers’.
This includes the removal of capital gains tax on investments in the market.
“There are no foreign restrictions. We continue to look for into other incentives to make the market more attractive,” Odundo added.
The move will go along with the ongoing efforts to harmonize trading rules across the region. NSE is working closely with its peers to harmonize trading rules which will allow companies and investors to raise money in Kenya, Uganda, Tanzania and Rwanda.
A recent cross listing is by Bank of Kigali (BK) Group Plc who’s shares started trading at the Nairobi bourse in November last year.
The largest lender by assets in Rwanda became the second company to cross-list on the Nairobi bourse after Uganda’s Umeme which entered the market in December 2012.
BK Group’s shares whose primary listing is Rwanda Stock Exchange entered the market with a price of $0.30 (Ksh30) per share with the funds majorly going into its expansion strategy.
“We took this opportunity to cross-list on the Nairobi Securities Exchange because we wanted not only to offer more liquidity to our existing shareholders, but also exposure to the Rwandan market for potential new shareholders,” chief executive Diane Karusisi said during the listing.
Meanwhile, NSE is upgrading its systems to curb outages that affected the bourse at least twice last year.
“Our upgrade programme should by first half of this year and we are really scaling up the NSE platform. We are going to be able to introduce new liquidity tools like securities lending and borrowing which has been something that is lacking,” Odundo said.
NSE is keen to end the IPO drought which is entering its eleventh year. The last time the country witnessed a major offering was in May 2008 when Safaricom went public.
The telecommunication company was oversubscribed by 532 per cent during the initial offer.
Other landmark IPO’s include KenGen, Britam and Co-Operative Bank which took place between 2006 and 2011, a period the market recorded about eight key IPOs.
This year, NSE is expecting the cross listing of the National Oil Corporation (NOC) on the Nairobi bourse and the London Stock Exchange (LSE) later this year.
The Kenyan government is keen to sell a stake in the state owned oil firm which will see investors get a chance to acquire shares, as the government moves to raise funds to invigorate the oil industry.
NOC is targeting to raise US$1 billion (Ksh100 billion) during the initial offer.
NSE is also counting on the “Ibuka” programme launched in December last year to attract more listings.
Ibuka which is a Swahili translation for ‘emerging’ is an incubation and acceleration programme which seeks to unlock the potential of small and medium sized companies.
The programme intends to enhance the firms’ financial, technical, operational, commercial and strategic aspects of their businesses. It also enables the companies to raise capital through debt and equity market as they track valuation as well as produce specialized documents such as capital raising and equity raising reports.
On new IPO’s, NSE is also counting on the planned privatization of state-owned entities in Kenya, which will see at least 26 poorly performing entities sold. The move will include offering IPOs at the Nairobi bourse to allow the public to buy shares into the institutions.
The move to awaken the IPO market gels with the Kenya Association of Stock Brokers and Investment Banks (KASIB) sentiments. Through the entity, Stock Brokers have been calling on major companies and investors to raise capital through sale of equity to the public.
A major IPO will rejuvenate the market, according to KASIB Chairman Paul Mwai.
“We need a big sizable IPO. This way investors will open brokerage accounts as they seek to look at the share market. That rejuvenates the market,” Mwai said.
The country’s capital market has been on a dry spell with only two low-key IPOs at the Nairobi Securities Exchange in last five years.
This was the 2014 self listing of the NSE (the company) and the Stanlib I-Reit, Kenya’s first listed real estate investment Trust which went live in October 2015.
The bourse is yet to witness a major IPO’s since Safaricom.
On the contrary, other markets in the region such as Rwanda and Tanzania have in recent times witnessed increased offer activities.
Tanzania, for instance, had a major sale when Vodacom Tanzania, a unit of South Africa’s Vodacom Group, sold all the 560 million shares floated at the DSE, where 40 per cent went to foreign investors.