The Nairobi Securities Exchange (NSE) #ticker:NSE is eyeing investments in regional bourses as it looks to supplement the revenue it earns from trades and data sales at the local market.
The bourse recently bought a 4.9 percent stake in Tanzania’s Dar es Salaam Stock Exchange (DSE) and is now looking at investing in the Uganda Securities Exchange ( USE) once it self-lists.
Regional bourses have already attracted cross-listings from several Kenyan companies such as KCB #ticker:KCB , Equity Holdings #ticker:EQTY , Kenya Airways #ticker:KQ , DTB #ticker:DTK , and Uchumi Supermarkets #ticker:UCHM , boosting their relatively low home-grown listing numbers.
Investing at this stage in the bourses would give the NSE a potentially rewarding return down the road when these bourses grow in size, with the exchange, therefore, viewing these investments as being of strategic value.
“We are looking at investing in other exchanges in the region as they undergo demutualisation and go public….USE is not listed but has been demutualised,” said NSE chief executive Geoffrey Odundo.
The NSE had initially acquired a stake in the Dar bourse when it rolled out an IPO in 2017, before selling it, and then returning back to purchase the 4.9 percent stake.
The NSE itself demutualised and self-listed in 2014, allowing the public to own shares in the company which was previously wholly owned by trading intermediaries (stockbrokers).
Many of the stockbrokers and investment banks —which after listing each held a stake of 2.7 percent in the bourse— have since sold their shares either fully or in part.
Locally, the NSE has invested in several subsidiaries over the years, including NSE Clear Limited, a company formed to act as a central counterparty in all derivative transactions.
It also holds a stake of 38.5 percent in the Central Depository & Settlement Corporation Limited, which provides automated clearing, delivery, and settlement of shares traded at the market.
The NSE’s net profit declined 21 percent to Sh132.5 million in the year ended December on higher costs.
It has, however, declared a record dividend of Sh364 million or Sh1.4 per share.
This includes a final dividend of Sh0.4 per share and a second special payout of Sh0.5 per share, adding to the first special distribution of Sh0.5 per share in December.
Mr Odundo said the company will still be left with cash that it will use to make additional investments in the business.