Markets & Finance

Shoe vendor set to become first GEM listing in 15 months


Nairobi Business Ventures chief executive Vasu Abotula. PHOTO | DIANA NGILA

Shoe and leather accessories vendor Nairobi Business Ventures (NBV) is expected to become the first listing in 15 months if it is admitted by the end of this month.

NBV, which operates a chain of shoe stores under the KShoe brand, will list under the Growth Enterprise Market Segment (GEMS) by way of introduction once it receives the final approvals from the Nairobi Securities Exchange’s (NSE) listing and approvals committee.

The firm is listing at a time the bourse is in a bearish mood, meaning its founders may have to settle for a lower listing price than they would have enjoyed had they come into the market a year ago.

Chief executive Vasu Abotula said listing is not meant to raise capital given the depressed nature of the market.

“We have completed our private placement and now have the minimum required 25 shareholders, and we have also added three directors to our board to reach the required five ahead of the listing,” he said.

“We are offloading 15 per cent of the firm’s equity. We had planned to sell a larger share but we have kept it at the minimum for now because at the moment we have not realised the right price in the market.”

NBV first made public intention to list early last year but the process took time as the NSE, Capital Markets Authority and the nominated advisers CBA Capital insisted on a more thorough scrutiny of the firm’s corporate governance, financial performance and expansion plans.

The firm which operates six outlets in Nairobi will become the fifth company to list on the GEMS segment after Home Afrika, Flame Tree Group, Kurwitu Ventures and Atlas African Industries Limited.

The GEMS listed firms have returned mixed performances since the segment was launched. Home Afrika and Atlas have seen their prices tumble to Sh1.90 and Sh1.50 — having listed at Sh12 and Sh11.50 respectively — as both hit financial headwinds.

Wholesale business

Kurwitu ventures barely trades at the bourse since listing at Sh1,500 in November 2014, with its price remaining unchanged since then.

NBV, founded by Mr Abotula and his business partner and current managing director Raj Srungarapu, previously traded as Kwanza Shoes after the company acquired Pakistani firm Servis, which exited the market in 2012.

The firm started as a wholesale business importing shoes for local retailers, but moved into retail once some of their larger customers began importing their own products.

The first retail shop was at Village Market, before the acquisition of the three Servis shops at Kenyatta Avenue, Moi Avenue and Ongata Rongai.

Mr Abotula said that the firm is expecting a turnover of Sh90 million for the full year ending March, up from Sh74 million in the year ending March 2015.

NBV plans to open five new outlets per year, having initially hoped to fund the expansion through the proceeds of the listing.

Due to the depressed nature of the market however, the firm plans to use bank loans and ploughed back profit to fund the expansion in the next two years.

“We are looking for visibility through this listing, rather than to raise capital. Once the investors observe our growth, we can then go for a second round of listing more shares down the road perhaps through a rights issue through which we can raise capital,” said Mr Abotula.

The firm, which has 36 employees, plans to start its own shoe manufacturing factory near the Machakos Leather Park once it is in operation.