UK property firm seeks Sh5bn ahead of Nairobi listing

UK-based St Paul’s Property Trust is seeking to raise Sh5 billion from the local market ahead of its listing on the Nairobi Securities Exchange (NSE).

The company is planning to list on the NSE’s Growth Enterprise Market Segment (GEMS) by the end of the year.

“We are planning to raise Sh4 billion through listing on the NSE but have a green shoe option of Sh1 billion,” said Richard Britten-Long, a director at St Paul’s.

This means the firm will take up to Sh5 billion if there is an oversubscription.

The company said it could not give finer details such as the listing price or how many shares will be listed pending regulatory approval.

The firm’s strategy is to buy high-grade offices that can house government departments, which normally tend to sign long term leases and do not default on payments, ensuring stable and reliable rental income.

Funds raised from the Kenyan market will be used to buy up to four rental properties outside London and whose tenant is the UK government or town councils.

St Paul’s Trust will then borrow using the additional properties as collateral and use the debt to buy properties that have the ability to be shaped up and then sold or rented at a premium.

The NSE listing is meant to tap into the local capital market where there is demand from fund and pension managers who want to diversify their portfolios in light of the bourse’s bear run, which has touched a three-year low.

“The company has chosen Kenya for its primary listing due to the demand for, and relatively low supply of, high quality and risk-averse listed commercial property vehicles. Several successful listed property vehicles are already listed on the Johannesburg Stock Exchange,” said St Paul’s Trust in a statement.

READ: UK property firm St Paul’s to list on NSE

Analysts say that they expect the bourse to remain suppressed due to the numerous profit warnings that have been issued in recent months.

“We remain neutral with a negative bias on equities given the significantly lower earnings growth prospects for this year. The market is now purely a stock pickers’ market, with few pockets of value,” said a market report by Cytonn Investments.

Pension and fund managers are also showing interest in returns that are denominated in another currency in light of the weakening shilling, which has touched Sh105 to the dollar, a 14 per cent depreciation since the beginning of the year.

Kenswick will manage St Paul’s property portfolio while Burbidge Capital are the nominated advisors. Coulson Harney will handle the legal work, Deloitte are the reporting accountants and Levanter Africa are in charge of communications.

St Paul’s will also join its compatriot Atlas Development and Support Services which cross-listed on the NSE in December 2014.

East African Data Handlers and Empire Microsystems are other firms that plan to list on the NSE’s GEMS.