Mrs Anne Gachui rings the bell during the listing of TransCentury shares at the NSE last week. She is with the Capital Markets Authority CEO, Stella Kilonzo (right) and Zeph Mbugua, the chairman of the firm. File
Investment firm, TransCentury’s share price dropped 7.6 per cent on the second day of trading reflecting a cooling of activity on the counter after a robust day one performance.
The private equity firm’s share price dropped to Sh52.67 from day one’s average price of Sh57 that was 14 per cent higher than the introductory price of Sh50.
The number of shares traded dropped to 95,000 from 1.14 million on the first day.
Johnson Nderi, an analyst at Suntra Investment Bank, said trading on TransCentury’s counter declined “on a straight line curve” meaning that there was a gradual fall in activity.
The share opened trading at Sh57 but fell gradually to close the day at Sh51.50.
Analysts were divided on the direction the share price might take in the next few weeks with most saying they expect volatility in the coming weeks as the market weighs the firm to discover its price.
“Discovery is still taking place so we expect some degree of volatility in the short term,” said George Bodo, an equity strategist at Apex Africa.
Analysts at Sterling Investment Bank said that they expect low level of liquidity on the TransCentury counter to prop up the share price above the Sh50 introductory price.
“We anticipate that illiquidity of the stock will support the price above Sh50 in the near term,” said the investment bank says in a note to investors. Friday’s trading was also unique in the absence of foreign traders on the TCL counter unlike the previous day’s when they accounted for 61.5 per cent of the counter’s turnover.
In the first hours of trading on Thursday, foreign investor participation accounted for between a third and 50 per cent of the first two deals, said Sheema Shah, a dealer at Dyer and Blair Investment Bank.
Local retail and institutional investors took part in the first day of trading despite fears that the price to earnings ratio of 38 would put them off.
TransCentury has 267,038,090 shares but only 50 per cent or 133 million are available for sale for the next two years as per the listing conditions provided by industry regulator, the Capital Markets Authority.
The company has 150 million shares that have not been issued, but are reserved for buyers of the Sh6.7 billion bond it is currently selling in Mauritious and whose proceeds will go to the Rift Valley Railways where it has a 34 per cent stake.
This is, however, based on the assumption that the bond is fully converted upon listing and that it is held to maturity and not converted.
“Rift Valley Railways presents such an opportunity and is expected to at least triple its business and revenues in the near term,” said Kuda Kandungure, an equity analyst at Goodson Capital Partners.
TransCentury has also invested in consumer goods, specialised engineering, transport, property and investment funds and power infrastructure.
The power infrastructure division of the company contributed 81 per cent or Sh4.5 billion of the Sh6.8 billion turnover in 2010.
