News Column

Nairobi Exchange Goes Public

July 28, 2014

The Nairobi Securities Exchange (NSE) has become the first in East Africa and the second after the Johannesburg Stock Exchange (JSE) to demutualise and list itself.

Consequently, Kenyans now have the opportunity to own a piece of the Nairobi bourse after its Initial Public Offering (IPO) commenced last week.

Sixty-six million shares, each at a cost of Ksh9.50 (about 11 US cents) will be on offer in the IPO that runs until August 12.

The minimum number of shares one can purchase is 500 at Ksh4,750. Thereafter, purchases are in multiples of 100 shares.

NSE chairman Eddy Njoroge termed the IPO a major milestone as ordinary Kenyans will now own a piece of the region's largest exchange.

The exchange aims to list about 194 million shares-valuing the bourse at slightly below Ksh2 billion.

According to NSE's prospectus, 22 investment brokers own about 59.3% shares, the government 3.4 per cent, while the Investor Compensation Fund Board owns 3.4 per cent.

Following the IPO, public shareholding will be at 34%. Njoroge said self-listing will help the bourse build investor confidence and also facilitate the development of the country's capital markets as envisaged in the Capital Markets master plan.

He urged Kenyans to take advantage of the IPO to acquire shares at the bourse through any of the authorised agents in the country.

"Self-listing is proof of our commitment to transparency and good corporate governance. It builds investor confidence in our business as a market operator and places the bourse in a better position to facilitate the further development of Kenya's capital markets as envisaged in the Capital Market Master Plan," Njoroge said.

Those interested in buying the shares are required to open a Credit Default Swap (CDS) account at the Central Depository and Settlement Corporation (CDSC), through authorised CDS agents.

National Treasury Cabinet secretary Henry Rotich said demutualisation and self-listing of the NSE is part of the government's policy to enhance governance standards and facilitate access to markets by a wider

"One of the key objectives of the Capital Markets Master Plan is to build on recent market reforms to address regulatory and institutional constraints in order to strengthen market infrastructure, intermediation, oversight and governance standards," he said.

The IPO will culminate with the self- listing of the NSE on the Main Investment Market Segment (MIMS) in September, this year.

The Nairobi bourse posted a 210 percent increase in net profit to Ksh263 million in 2013 from the Ksh84.78 million recorded in 2012.

Market capitalisation rose by 49.91% to Sh1.92 trillion while the NSE all share indexes moved up by 33% in the period driven by the 79.45 percent rise in equity turnover to Ksh155.75 billion from the Ksh86.79 billion recorded in 2012.

The exchange also plans to invest Ksh250 million to upgrade the technological systems that will support the trading of equities, implement a new system for the trading of bonds, and implement systems to support the new markets that include REITS and ETFs.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: AllAfrica

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