NSE is this year gearing for major IPOs as it seeks to end decade long drought
The Nairobi Securities Exchange (NSE) launched its incubation and acceleration programme dubbed “Ibuka” on December 17, 2018.Ibuka is Swahili for “emerging”.
Under the programme, NSE is targeting local companies from across the country with the initiative which is designed into two phases.
First is the incubation phase. Here companies are supported to enhance their financial, technical, operational, commercial and strategic aspects of their businesses.
The second stage is the acceleration phase which enables 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.
During the December launch, 13 companies had submitted expressions of interest to join the programme while 10 others had shown a keen interest in participating. NSE has so far admitted three companies to the programme.
The first company was APT Commodities Limited enlisted on January 31, 2019 after a rigorous evaluation and vetting process.
The first company among an elite cadre of enterprises expected to join the programme, APT focuses in export of both straight line and blend teas.
A member of the Tea Directorate and East African Tea Trade Association, the company boasts of a wide portfolio of brands such as Jambo Chai Tangawizi, Hassan Tea and Equity Green Tea consumed in various markets across the world, with a considerable market share in the Middle East.
The incubation is expected to boost the company’s capacity and a possible listing in the near future.
“This platform will enable us to scale higher in the already popularized Tea Industry,” said Peter Gitata, APT Commodities Chief Executive Officer.
During the admission, NSE Chief Executive Geoffrey Odundo said: “This admission is a key milestone for both APT Commodities Ltd. and the NSE. It underscores APT Commodities’ potential for growth as companies on the programme are evaluated by a team of highly qualified expert consultants and financial advisors with high levels of experience in capital markets.”
The second company came on board on March 15. 2019 where NSE admitted Globetrotter Agency Limited (Globetrotter), a leading travel and tours Company with enhanced domestic and international travel solutions.
Established in 2015, Globetrotter offers a wide variety of services including Medical Tourism, Airline and Hotel Reservations to tourist from various markets across the globe.
Globetrotter CEO Vidya Jethwa said the programme: “will spur our company to its next phase in line with our growth and expansion strategy.”
Last Thursday, Moad Capital became the third company to join Ibuka, affirming the programmes’ continued growth.
Moad Capital is a niche business with a rich culture of providing independent commercial real estate advice and implementation, energy and consultancy services in the East African region.
“The admission to the Ibuka Program is a critical achievement and will play a fundamental role in preparing our business in its next phase of growth,” Moad management noted.
NSE is leaving nothing to chance in its ambitious programme as it seeks to revitalize the bourse which closed the year 2018 on a bear run, when the market lost 17 per cent on capitalization.
This was occasioned by among others, a dip in stocks and withdrawal of investments by foreign shareholders.
The bourse closed the year with a total market value of US$20.6 billion against US$ 24.5 billion posted the previous year, with more than a third of the listed firms reporting either profit drops, losses or issuing profit warnings.
Now with the Ibuka programme, the NSE is keen to have a possible listing by some of the companies enlisted on the 10-month course, aimed at enhancing their visibility, offering access to a host of financial advisors and consultants, and exposure to local and international investors.
Additionally, the program will assist in inculcating improved corporatization, develop capabilities to access capital markets as well as provide a roadmap to long term corporate sustainability.
The developments on the programme come in the wake of improved market performance in 2019 where the bourse has recorded increase in turnover, posting a daily average of Ksh0.5 billion (US$4.9 million) and Ksh1.9 billion (US$18.9 million) for Equity and Bonds respectively.
“This programme will enable companies unlock their growth potential through a well-structured incubation programme that places a special focus on enhancing the select companies’ business structure, visibility and ability to attract investment among local and international investors,” Chief Executive Odundo notes.
According to the NSE management, the programme has been designed to meet international standards that will see Kenyan companies benefit from access to a wider network of experienced market professionals, broaden their knowledge and experience, and enable them join an excellent path towards access to the Kenyan capital market.
A number of businesses, including family owned businesses are expected to join the programme.
Among those which have been working closely with the NSE is retail chain-Tuskys Supermarkets.
“We are honoured and delighted to be part of a programme that will help us fast track our business and future outlook through expert consulting and business modelling for enterprise growth and development as we look towards our next growth phase for our business,” Tuskys CEO Dan Githua said at an event in Nairobi.
The programme is gaining momentum at a time when NSE is gearing for major Initial Public Offerings (IPOs) as it seeks to end a decade-long drought in the market.
Public offers expected include the dual listing of the National Oil of Kenya which is expected to go live at both the NSE and the London Stock Exchange (LSE), targeting to raise more than Sh100 billion.
The government is also keen to privatize a number of poor performing state-owned corporations to raise funds to bridge development budget.
The Privatisation Commission is reported to have approved sale of the 26 poorly performing corporations to cut down government spending.
The last time Kenya witnessed a major offering was in May 2008 when Safaricom went public, attracting more than 860,000 applicants in one of East Africa’s biggest market activity that was oversubscribed by 532 per cent.
“This year, we want to focus on getting IPOs. We are engaging all companies that have interest in IPOs,” Odundo said in Nairobi during a briefing on 2019 outlook.
The bourse is also targeting companies from Uganda and Tanzania in a cross-listing initiative.
NSE is the principal securities exchange of Kenya. Besides equity securities, the NSE offers a platform for the issuance and trading of debt securities.
It is a member of the African Securities Exchanges Association (ASEA) , the East African Securities Exchanges Association (EASEA), and a full member of the Association of Futures Markets (AFM), the World Federation of Exchanges (WFE) and a partner Exchange in the United Nations Sustainable Stock Exchanges Initiative (SSE).