Recent changes in CMA regulations have given investment banks the sole mandate to advise on capital market transactions.
The capital markets regulator has omitted Ngenye Kariuki & Company Stockbrokers from its annual list of licensees for 2012, casting doubts on prospects of the agent coming back to the market within the year.
Ngenye Kariuki was put under statutory management in 2010 after experiencing financial difficulties, but in December last year the Capital Markets Authority (CMA) lifted the broker’s ban paving the way for its return to the bourse.
The CMA published the approved stockbrokers in a list dated April 27.
It is signed by chief executive Stella Kilonzo and chairman Kung’u Gatabaki.
The Chief executive and principal shareholder of the brokerage firm, Ngenye Kariuki, could not be reached for comment on Tuesday as his mobile phones were switched off.
The regulator had also not responded to our queries by the time of going to press.
In an interview following the lifting of statutory management in December, Mr Kariuki said that the firm was planning a comeback after a two-year hiatus.
He attributed his firm’s financial woes to reconciliation difficulties that followed the 2008 Safaricom initial public offering (IPO), the largest ever handled in the region.
The IPO coincided with the switch from a manual trading system to an electronic one that left loopholes for fraudsters.
“Going forward, the Authority will be working with Ngenye Kariuki & Company to ensure full compliance with the requirements for licensing of stock brokers before consideration is given to lifting its suspension from trading at the Nairobi Securities Exchange,” said Mrs Kilonzo in December after announcing the lifting of its suspension.
Ngenye Kariuki shareholders have had to pump in more than Sh100 million and sell a 10 per cent stake to other partners to rescue the firm from collapse.
The firm had about 96,000 customers before troubles began.
The list of licensees released by CMA also showed that Suntra Investment Bank had decided to downgrade to a stock brokerage firm.
Suntra will have to substitute the “investment bank” tag with “capital”.
“This licensee is in the process of effecting a change of name to reflect its licence status as a stockbroker. Accordingly, this change of name shall be posted on the authority’s website,” said CMA in a note.
Suntra joins Sterling Investment Bank and ApexAfrica who downgraded their businesses to brokerage firms from investment banks last year and are now known as Sterling Capital and ApexAfrica Capital respectively.
Sterling Capital said at the time that the Sh250 minimum share capital required by the regulator was too steep a price to maintain the investment banking status.
Stockbrokerages are required to have a Sh30 million minimum shareholder capital.
Suntra Investment Bank had sold a 10 per cent stake to UK-based Fusion Capital for Sh25 million in March last year.
Investment banks, unlike stockbrokers, have more opportunities to make money since they can sell transaction advisory services on listings, mergers and acquisitions, restructuring during receivership management.
Recent changes in CMA regulations have given investment banks the sole mandate to advise on capital market transactions.
“All these people come before you, you represent the clients in securing the sponsoring broker, the legal adviser and the public relations company,” said the Faida Investment Bank chief executive, Bob Karina.
