CIC freezes share trade ahead of NSE listing

CIC Insurance is set to freeze trading of its share this Friday, taking preparations for its forthcoming listing at the Nairobi Securities Exchange (NSE) a notch higher.

The insurer notified shareholders that its register will close on January 27 to facilitate conversion of share certificates into electronic accounts — a pre-requisite for listing at the securities exchange.

Trading of the firm’s shares on the over the counter (OTC) market will be suspended from trading indefinitely.

Investment bankers said the suspension of trading ahead of listing is a regulatory requirement that is meant to avoid speculators manipulating the company’s share price.

“The Capital Markets Authority (CMA) does this specifically to protect investors who may be taken advantage of and sell their shares for a song,” said Standard Investment Bank executive director, Job Kihumba.

Supply

During this period, share of the company is frozen and cannot be sold, exchanged or transferred.

Mr Kihumba said there is no stipulated time for the freeze, which may take a few weeks or months pending CMA approvals for the transaction.

Traders at one investment bank said supply of CIC shares last week exceeded demand.

Buyers were mostly asking for Sh65 a share against the Sh70 and Sh80 price quoted by sellers.

OTC trading works on a willing buyer, willing seller basis unlike organised exchanges that match sales and purchases automatically on an electronic board that is visible to all traders.The Sh65 price is a drop from the Sh90 trading level in early 2010.

“A lot of people are coming wanting to exit because there is a lot speculation in the market,” said the traders.

TransCentury and British American shares have fallen sharply since they listed in 2011.

Kestrel Capital chief executive, Andre DeSimone, said that typically the journey from intention to list and opening the offer sale takes between four to 12 months, with publishing of the prospectus taking up the most time.

If everything is in order then CIC Insurance can get clearance from the CMA in a couple of months or weeks.