Bourse targets investments in property market

The Nairobi Securities Exchange (NSE) plans to buy property in Westlands to help increase its non-core business revenue, a move expected to help lift its profits when traditional income sources decline.

Although details on the purchase are still scanty, Peter Mwangi, the chief executive officer, confirmed to the Business Daily that the bourse is shopping for property in the Westlands area where a number of other financial institutions have been relocating to.

“The NSE seeks to purchase a property in Westlands, which is in line with our corporate objectives,” said Mr Mwangi without providing details on the venture which could cost as much as Sh400 million and rope in a financier.

But it is not clear if all the operations of the Nairobi bourse will be moved to the new location when it acquires such property.

Most recently, Barclays Bank said it was moving its headquarters to The West End building next to Safaricom’s headquarters on Waiyaki Way, adding on to the list of companies that have been relocating from Nairobi’s central business district.

Standard Chartered Bank and CFC Stanbic have moved their headquarters to the Westlands area where new buildings have been coming up, making it an alternative location for companies that are looking to move from the city centre.

KCB Group said it is investing Sh2.1 billion in the construction of its new headquarters in Upperhill where firms such as Commercial Bank of Africa, British American Investments Company, CIC Insurance, Coca-Cola, Old Mutual and Equity Bank are based.

“I think it is long overdue and they will need the rent because when things go down sometimes you might not be able to cover your overheads,” said John Kirimi, executive director Sterling Capital and chairman of the Kenya Association of Stockbrokers and Investment Banks.

According to NSE’s latest annual report, non-core business income helped the bourse post an after-tax profit of Sh85.6 million in 2011, in a year when its traditional income which includes transaction levy, annual, initial application and additional listing fees rose by only three per cent to Sh301.9 million from Sh292.7 million.

Other income rose by 21 per cent last year to Sh16.5 million from Sh13.65 million earned in 2010 while interest income jumped by 61.6 per cent to Sh20.48 million from Sh12.67 million the previous year.

“The exchange is keen to diversify income from transaction levies and listing fees. Total income got a significant boost from alternative revenue sources,” said Mr Mwangi in the in the annual report.

The NSE receives a transaction levy of 0.12 per cent of the value of equities traded on the platform and 0.0035 per cent of the value of fixed income securities.

dmugwe@ke.nationmedia.com