A planned study by the Capital Markets Authority will in future help guide the cost of listing on the Nairobi Securities Exchange.
The initiative according to sources, follows a similar study by investment adviser RisCura, which showed that prohibitive costs have led to “market failure” relating to Initial Public Offerings (IPOs) on African stock exchanges.
Findings would inform whether current fees would be reviewed or retained as the regulator and the bourse explore ways to bring in new investors amidst a listing drought.
The outcome will also determine the future of listing fees and whether they would be reviewed, three separate sources said.
“In line with CMA’s aspiration to be a responsive regulator, management has been on a journey of reviewing a number of regulatory provisions to align them to current and the ever-evolving capital raising and listing realities and is currently at the tail-end of overhauling its Public Offers and Listing Disclosure (POLD) and Collective Investment Schemes (CIS) Regulations,” said the CMA earlier in a market report alluding to the planned review.
The initial and annual fee charged on the NSE Main Investment Market Segment is 0.06 percent of the market capitalisation subject to a minimum of Sh200,000 and maximum of Sh1.5 million.
Annual listing fees refer to the amount of money that all listed firms pay the NSE every year for being on the bourse.
This means that delistings and fall in value of shares of listed firms contribute to a drop in annual listing fees paid. Similarly, 0.06 percent of the value of the securities to be listed subject to a minimum of Sh100,000 and a maximum of Sh1,000,000 is charged as initial fees on those seeking to list in the alternative Investment Market Segment.
The NSE has separately been pushing the now fully constituted privatisation agency to hit the ground running in the disposal of State-owned agencies through sale of shares at the bourse.
In its latest bid to bring in new investors to the bourse amid a lack of major listing in the last six years, the NSE wants the beefed-up agency to fast-track its privatisation programme, which involves listing of State corporations.
“With the appointment of board members who have been missing for the last two years, the commission is now able to execute on its core mandate of identifying and preparing government assets for privatizations,” said NSE chairman Kiprono Kittony in the bourse operator’s latest annual report.
“This will help develop a robust pipeline of State enterprises which could be privatised or improved through private sector participation. This will enhance quality listings on the NSE and support us to enhance opportunities for investors.”
The bourse, which has also been pushing for a scale-down of government ownership in listed companies and an increase in additional shareholding, wants the commission to fast-track the listing process.
The government in 2015 announced plans to sell shares in sugar millers Nzoia, South Nyanza, Chemelil, Muhoroni and Miwani.
The privatisation commission said earlier it plans to sell 51 percent of each of the millers to strategic investors with a track record of managing sugar companies. But this has not materialised nearly seven years later. The planned sale of loss-making government-owned hotels has also stalled.
The privatisation agency has only managed to conclude a single deal — that is the Kenya Wine Agencies Limited in over a decade. The last successful privatisation by the government was the Safaricom IPO in 2008.