NAIROBI, APR 23 — Kenya’s capital market requires a major Initial Public Offer to rejuvenate the market, stockbrokers in the country have said, calling for an end to the drought of IPO’s at the Nairobi bourse.
Through their lobby group- the Kenya Association of Stock Brokers and Investment Banks (KASIB), Stock Brokers have challenged major companies and investors to raise capital through sale of equity to the public, noting that the market is ripe.
“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,” KASIB Chairman Paul Mwai said, during the just concluded 7th Building African Financial Markets (BAFM) seminar in Nairobi.
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 major IPO’s such as the Safaricom offer which shook the market in June 2008 after attracting more than 860,000 applicants.
Other memorable offerings were electricity generator- KenGen, the Co-Operative Bank and Britam, all falling between 2006 and 2011 when the market recorded about eight key IPOs, invigorating trading at the Nairobi bourse.
“We look at the market and it is the right time,” said Mwai who is also the Chief Executive at AIB Capital, “There is need to increase privatization. We are not creating opportunities or Kenyans to invest.”
He said the government and private sector must create opportunities for Kenyans, while enhancing returns on investments in the market.
The NSE management has been keen to enhance trading at the bourse with the introduction of new products, while encouraging companies to list.
Among new developments is the Exchange Traded Fund which kicked off in February last year.
The regulator- Capital Markets Authority granted approval to South African firm NewGold Issuer (RF) Ltd to issue gold backed ETF at the Nairobi bourse.
In March last year, CMA announced the signing of 70 potential issuer, in a Business Incubator and Accelerator initiative, aimed at increasing listings on the NSE.
Among those targeted were companies for the Growth and Enterprise Markets Segment (GEMS), which the NSE says it still remains keen on.
“There is a collaborative effort with these companies. A lot of education on the market has been going on. Companies are looking for the right valuation of their shares before coming into the market which is a key component,” NSE chief executive Geoffrey Odundo said.
He said the bourse will continue with product innovations, while expanding the capital markets which play a key role in funding development projects.