Capital Markets

Nairobi bourse targets seven new companies for listing


Nairobi Securities Exchange trading floor. NSE says it should be self-listing on Alternative Income Segment (AIMs) in the first half of this year. Photo/FILE

The Nairobi Securities Exchange (NSE) expects at least four new listings on the main board this year and three firms to join the yet-to-be established segment for small and medium enterprises.

Bourse chief executive Peter Mwangi said in an interview the exchange has received applications from at least seven companies that wish to list this year.

“We expect four new listings on the main board. We also expect the first three listings on the Growth Enterprise Market Segment (GEMs),” said Mr Mwangi.

The NSE, which currently has 60 listed firms, also expects to go public marking the end of an ownership restructuring process targeted at diluting stockbrokers’ sole-ownership of the exchange.

“And of course, the NSE itself should be self-listing on Alternative Income Segment (AIMs) in the first half of this year,” said Mr Mwangi.

The NSE boss, however, did not name the firms that have applied for listing due to confidentiality agreements. Family Bank, Deacons and UAP are some of the firms that have publicly announced listing plans.

Listing of SMEs will create a three-tier exchange and is expected to add vibrancy to the market.

The GEMS was designed to help small firms list and has lower entry requirements than companies that list on the Main Income Market Segment (MIMs) and the AIMs.

Firms listing on the GEMS will be required to have Sh10 million in fully paid up capital, which is a lower than the AIMs which require Sh20 million and the and MIMs that require Sh100 million in fully paid up capital.

SMEs listed on the GEMs must have at least 100,000 shares available for trading but should the free float fall below 25 per cent, the company will be delisted.
The laws operationalising GEMs came into effect in June 2012.

The stock market is off to a strong start this year with a market capitalisation of Sh1.3 trillion and the NSE-20 Share Index edging close to 4,300 points, a two-year high.

READ: NSE blue chips hit new highs on foreign investor demand

Investment bankers have, however, said there are government obstacles to exploiting the NSE’s listing potential.

NIC Capital managing director Wilson Irungu told the Business Daily in an earlier interview that many firms will choose the route of least resistance, such as private placements, due to the long time it takes to get approval from industry regulator, the Capital Markets Authority (CMA).

It can take up to six months to get approval from the CMA about double the time it will take for a private placement deal.

But the CMA said in an interview Thursday it would support new issues.

“We remain open to engagement with potential issuers at all times and will be working closely with the NSE to support the roll out of the GEMs segment of the NSE to see more SME and venture companies come to the market,” said the regulator.