Capital Markets

NSE plans to raise Sh700m through public offer after regulator approval

nse

The NSE board said that the IPO will open on July 24 and will run up to August 12. Photo/FILE

The Nairobi Securities Exchange (NSE) is seeking to raise what informed sources said was as much as Sh700 million through the initial public offer (IPO) to begin in the next two weeks.

Sources privy to the deal but not cleared to talk to the media told the Business Daily that while the actual amount the NSE wants to raise and the price per share was yet to be finalised, the numbers that have been mentioned are between Sh600 million and Sh700 million.

They added that the IPO price is expected to be between Sh9 and Sh10 going by early estimates. The NSE’s statement on the IPO said the self-listing will open on July 24 and close on August 12 but it did not indicate how much the bourse is seeking to raise or the price per share.

The listing came after the Capital Markets Authority (CMA), the industry regulator, approved the offer and demutualisation of the NSE at a board meeting held on June 27.

“This follows the June 27, 2014 approval by the CMA of the application of the Company to offer its shares to the public through an IPO and subsequently self-list its shares on the Main Investment Market Segment (MIMS) of the NSE,” said the NSE in a statement.

The NSE, however, said that the finer details will be revealed soon.

“We will be announcing the offer statistics and timetable shortly,” said NSE chief executive Peter Mwangi.

The bourse is owned by 22 member firms that control 90 per cent of the shareholding, while the Treasury and the Investor Compensation Fund jointly own the remaining 10 per cent.

The stake held by the 22 shareholders is expected to be reduced by 40 per cent within three years after listing.

Prior to the listing the NSE had agreed to increase capital to Sh850 million from Sh25 million and set aside Sh500 million for the setting up of a futures exchange at the firm’s 60th AGM held on April 25 in Nairobi.

The NSE issue will be the first in three years after Britam’s debut in July 2011 when the insurer managed to raise Sh3.5 billion against the Sh5.85 billion it had sought.

Consumer goods manufacturer Flame Tree Group and gold prospecting firm Mayfox Mining have also said they plan to list but on the NSE’s Growth Enterprise Market Segment.

READ: Roto tank and Zoe lotion maker plan NSE listing

Standard Investment Bank, Renaissance Capital, and Dyer & Blair Investment Bank are the transaction advisors on the NSE’s self-listing. The NSE will join the Johannesburg Stock Exchange as the only other African bourse that is self-listed.

Demutualisation and self-listing have been dogged by disputes over what share should go to the government, with brokers disputing the State entitlement arising from contribution to development of a market where privatisation issues and Treasury bills and bonds have been crucial.

The process has taken several years and hard negotiations from the parties. The NSE’s annual report shows it earned a net profit of Sh85.1 million last year, one per cent lower than the previous year’s Sh85.6 million.

The exchange mainly relies on trading commissions levied on transactions and fees charged on new listings at the market.

Turnover of the stock market went up by 11 per cent last year to Sh173.6 billion, earning the NSE Sh208 million in transaction levies. Annual listing fees and income remained flat at Sh70 million and Sh10.5 million respectively.