TransCentury share price rises by 14pc on first day of trading
Anne Gachui rings the bell Thursday during the listing of TransCentury Ltd shares at the Nairobi Stock Exchange, flanked by Zeph Mbugua , the chairman of the firm and Ms Stella Kilonzo, the Capital Markets Authority CEO. Mrs Gachui is the wife of former TransCentury chairman, the late James Gachui. William Oeri
TransCentury shares gained 14 per cent on the first day of trading at the Nairobi Stock Exchange becoming the biggest listed private equity firm and also the largest company by market capitalisation on Alternative Income Market Segment.
TransCentury shares closed trading at Sh57, a 14 per cent increase from the Sh50 introductory offer price giving the company a market value of Sh15.2 billion compared to Sh13 billion before the listing.
Centum Investments, the other listed private equity firm has a market value of Sh13.6 billion. The other eight companies in the AIMs segment have a combined market value of Sh5 billion.
Dealers said low volumes caused by lack of sellers defined the first day of trading pushing the price up.
“Offers are coming through but we have not seen many blocks,” said Anthony Waweru, a dealer at Standard Investment Bank. Mid-morning trade saw 36,000 shares exchange hands at Sh59.
Robert Munuku, an analyst at Drummond Investment Bank, said investors were waiting to see the trend before taking positions on the counter with larger blocks.
Of the shares traded, foreigners accounted for most of the transactions. “There is a bit of demand from foreigners,” said Mr Mwangi. By the close of the market foreign investors bought 880,000 shares valued at Sh50.16 million shares or 77 per cent of the 1.1 million shares sold Thursday.
Local retail and institutional investors also took part during the first day of trading despite analyst fears that the price to earnings (PE) ratio of 38 may put off investors.
Future prospects
A poll of six foreign analysts, however, said the future prospects of the firm justified the high valuation.
Johannesburg-based firm Goodson Capital Partners said that it had revised the rating of the private equity firm from Sh47 per share, issued before the finer details of the listing came to light, to Sh66 per share.
“TransCentury is one of a few players serving a market that is already several times larger it can currently satisfy,” said Kuda Kandungure, an equity analyst at Goodson Capital Partners.
Mr Kandungure said that under investments in the infrastructure sector despite the growing economies presented a high headroom for profits for the equity firm.
“The 25 per cent return seems ahead of frontier and emerging market expectations but, we do feel, it is highly realistic especially when we consider the growth,” said Mr Kandungure.
Infrastructure projects in the developed world have returns of between 8 and 13 per cent annually. Those that are highly leveraged, like in the case of parastatals, offer slightly higher returns.
The African Development Bank which finances infrastructure projects in Kenya targets a minimum return of 12 per cent annually. Transcentury has 150 million unisssued shares reserved for investors in a Sh6.7 billion bond whose proceeds will go into the Rift Valley Railways where the equity firm has a 34 per cent stake.
