NSE raises share capital, plans futures exchange ahead of listing
Mr Peter Mwangi, the NSE chief executive, says the bourse will offer 81 million shares to the public through the IPO. Photo/FILE
What you need to know:
NSE plans creating new 825 million shares for June initial public offering planned for next month.
Nairobi Securities Exchange (NSE) shareholders are expected to increase the number of shares and allocate Sh500 million for setting up a futures exchange ahead of the planned listing slated for next month.
Changes in the capital structure were approved at the firm’s 60th AGM held on April 25 in Nairobi.
Shareholders will now increase the bourse’s authorised share capital to Sh850 million from the current Sh25 million.
This will be done through creation of some additional 825 million shares of Sh1 par value, meant to give NSE enough shares to sell to the public and raise money through the planned initial public offer (IPO).
“We needed to increase the number of shares if we were going to raise money,” Faida Investment Bank chief executive and NSE vice chairman Bob Karina said.
NSE shareholders agreed to consolidate the 850 million shares into 212.5 million shares of Sh4 to ensure price stability after floating the shares.
“This will ensure that the effective price per share is not inordinately low as the company seeks to self-list,” said NSE chairman Eddy Njoroge in a letter to shareholders dated April 2, 2014.
NSE chief executive Peter Mwangi told Reuters in an interview that the bourse will offer 81 million shares or 38 per cent to the public through the IPO.
NSE is owned by 22 shareholders who control 90 per cent of the shareholding, while the Treasury and the Investor Compensation Fund jointly own the remaining 10 per cent stake.
The approvals will be cast in concrete once the Capital Markets Authority (CMA), the industry regulator, gives the final go ahead.
Standard Investment Bank, Renaissance Capital, and Dyer & Blair Investment Bank are transaction advisors on the self-listing. Shareholders also agreed to issue four bonus shares for every one held, which will come from the reserves.
NSE said that the bonus issue will give it enough capital to make it eligible for operating a futures market.
“This will enable the company to increase its capitalisation to Sh500 million as required for NSE to obtain approval from CMA to operate the business of a derivatives exchange,” said Mr Njoroge in the letter to shareholders.
The annual report indicates that as at the end of 2013 NSE had Sh750 million in reserves.
CMA had initially required companies wishing to set up the proposed futures exchange to have a minimum Sh1billion in capital, but Parliament exempted NSE from this rule and set the minimum capital requirement at Sh500 million.
The AGM approved 2.5 million shares to be set aside for employees of NSE and the Kenya Association of Stockbrokers and Investment Banks, the industry lobby group.
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