NSE chairman Eddy Njoroge (from left), Vision 2030 Secretariat director-general Mugo Kibati and Home Afrika chairman Lee Karuri during the bell ringing ceremony, marking the company’s debut at the NSE on Monday. Photo/Salaton Njau
What you need to know:
Price of Home Africa's share rises to Sh25 from Sh12 on the first day.
About 21,400 shares were traded on Home Afrika’s debut at the Nairobi Securities Exchange (NSE).
Home Afrika has 405 million shares which gives it a market valuation of Sh10.1 billion as per Monday’s closing price.
Home Afrika shareholders saw their wealth more than double after the firm’s share price shot to Sh25 from the Sh12 listing price on the first day of the real estate developer’s trading at the NSE.
Stockbrokers, however, tempered excitement around the counter with a prediction that it will take more trading sessions before establishing the company’s equilibrium price.
About 21,400 shares were traded on Home Afrika’s debut at the Nairobi Securities Exchange (NSE).
“Demand on the counter is weak (21,200 bids) coming in at between Sh5 and Sh22, but offers are 53,600 at between Sh25 and Sh26. We expect some volatility on the counter in the near term,” said a market report on the stock by NIC Securities.
Home Afrika has 405 million shares which gives it a market valuation of Sh10.1 billion as per Monday’s closing price. The listing price gave the five-year old company a valuation of Sh4.8 billion.
The real estate firm made history as the first company to be listed on the Growth and Enterprise Market Segment (GEMS), reserved for small and mid-sized businesses.
“It (the listing) indeed offers our shareholders a market-driven price discovery mechanism based on the actual fundamentals of our business,” said Lee Karuri, Home Afrika chairman at the launch.
Senior management of Home Afrika will have to hold onto their shares for at least one year as per the market regulator’s rule on golden handcuffs.
The company’s 128 shareholders are, however, free to offload all their shares, increasing the stock’s liquidity, since no single owner has a significant stake that would normally warrant a lock-in period.
“None of the existing shareholders beneficially owns a three per cent interest in the voting power of the issuer and have therefore not undertaken a lock-in period,” says the Home Afrika’s listing statement which is similar information memorandum.
Home Afrika Continental Limited and Home Afrika Investments Limited are the largest shareholders with a 5.92 per cent stake and a 5.03 per cent stake respectively, but the two entities hold the shares in trust for nine and 10 individual shareholders respectively.
Previous listings have required the top shareholders hold a certain stake for at least two years.
“Home Afrika Limited will endeavour to ensure the retention of members of the senior management team for a period of at least 12 months following the listing (except where such staff will be relieved of their duties following the commission of a grievous offence deemed inappropriate, or as adversely affecting the integrity of the company in its status as a listed company),” says the listing memorandum.
Going forward, the firm said that it will be focusing on the low and middle income segments of the housing market. It plans to construct 10,000 houses on a 1,000 acre land in Machakos County.
The project dubbed Kikwetu is expected to take five years and on completion will be home to between 60,000 and 100,000 residents.
“Home Afrika plans to roll out its flagship product, a prototype house which shall sell to the public at approximately Sh1 million, taking into account the cost of land, design, statutory costs, infrastructure, legal fees and a developer’s profit,” said the listing statement.
NIC Capital were the transaction advisors for the listing, PKF, Mboya Wangong’u & Waiyaki and Redhouse Public Relations are the reporting accountants, legal and communication advisors respectively while Cooperative Bank is the registrar.
