Home Afrika set for first listing on small firms board

Real estate developer Home Afrika is set to become the first company to list its shares on the Growth Enterprise Market Segment (GEMS), the newly created board for small firms at the Nairobi Securities Exchange.

The firm said Thursday it had received NSE’s approval to list 405 million shares on the bourse.

The listing price will be announced on July 15 when the shares begin trade on the GEMS board.

Listing of the shares will give Home Afrika’s 128 shareholders a chance to know how much the market values the first fully-fledged real estate firm to be listed at the bourse.

It will also open a window for other small and mid-sized firms to tap the capital markets for additional funding.

“The listing on GEMS provides a perfect window for the market to determine a fair valuation of shareholders’ investment and paves the way for future cash call events to drive our ambitious expansion plan in the region and the rest of Africa. It indeed offers our shareholders a market-driven price discovery mechanism based on the actual fundamentals of our business,” said the firm’s chairman Lee Karuri in a statement.

READ: Home Afrika set for listing on small companies board

Companies listing on the GEMS board are expected to meet less stringent share capital, profitability and reporting requirements than those whose stock is traded on the main board.

Mr Lee Karuri is a founder of the company which began as an investment club. Mbugua Kamau, Lucie Maina (secretary) and Mbira Gikonyo are other co-founders of the real estate firm that started in 2008.

Home Afrika is currently handling a Sh10 billion property portfolio, which includes the Migaa, a live-in-golf community in Kiambu County, Lakeview Heights (Kisumu County), Llangwe (Kwale County) and Kikwetu (Machakos County).

It has been relying on shareholder funds and commercial bank loans to finance projects, but listing will give the real estate firm wider funding options.

“The listing on GEMS marks our great journey in preparation to be a key player on the Real Estate Investment Trusts (Reits), bonds and equities markets,” said Dan Awendo, a director of Home Africa and chief executive of Investeq Capital.

The first listing is also expected to break the ice on listing by small and mid-size companies on the GEMS, which was officially launched in January 2013.

The Capital Markets Authority (CMA), the industry regulator, passed the laws creating this segment in June 2012.

In a previous interview Home Afrika said that the GEMS listing will also act as its springboard to the Main Investment Market Segment (MIMS), which will require compliance to additional CMA regulations, and a bigger share capital.

A firm is required to have Sh10 million in capital to be listed on the GEMS board but Sh50 million for the Alternative Investment Market Segment (AIMS) and Sh100 million for a MIMS listing.
Home Afrika has been targeting the middle income home buyers but has said that a part of its strategic plan is to go mass market, with starting prices at the Sh1 million level.

The large market has been under-served due to the high returns in the high-end of the market but financiers are beginning to tap into this sector.

Shelter Afrique plans to raise a Sh8 billion bond specifically targeting first-time home buyers.

Home Afrika’s strategic plan is also to grow this portfolio by more than eight times to $1 billion (Sh87 billion) over the next five years.

NIC Capital is the Nominated Advisor for the listing. The investment bank was appointed to shepherd the listing in February this year.

PKF, Mboya Wangong’u & Waiyaki and Redhouse Public Relations are the Reporting Accountants, Legal and Communication Advisors respectively while Cooperative Bank is the Registrar.

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