Stockbrokers upbeat as NSE offering ends amid investor rush

What you need to know:

The NSE offer is the first listing this year and the only IPO since Britam in July 2011.
The stockbrokers said realising the target would also make potential issuers more comfortable in raising money through IPOs.
The offer’s results are expected to be announced on September 5 and listing should take place on September 9.

Stockbrokers have expressed optimism that the Nairobi Securities Exchange (NSE) initial public offering that ended Tuesday will hit its target.

Brokers said the offer was characterised by last-minute orders, especially from retail and institutional investors, but added that there had been a lot of interest in the issue since it opened on July 24.

The NSE offer is the first listing this year and the only IPO since Britam in July 2011.

“This issue has generated a lot of interest and excitement and we expect full subscription,” said the Kenya Association of Stockbrokers and Investment Banks chief executive Willie Njoroge.

READ: High demand likely to drive oversubscription of NSE offer

The stockbrokers said realising the target would also make potential issuers more comfortable in raising money through IPOs.

The information memorandum says the IPO needs to raise at least Sh431 million for it to be declared a success.

“A minimum of 68.8 per cent of the offer is required to be accepted for the offer to be declared successful. This implies that a minimum of 45,400,000 offer shares need to be taken up and fully paid for in the offer,” reads the memorandum.

Faida Investment Bank chief executive and NSE vice chairman Bob Karina told the Business Daily that the last-minute rush was expected, especially from institutional investors who normally buy towards the end of an offer.

He also said there had been a lot of interest in the issue.

The offer’s results are expected to be announced on September 5 and listing should take place on September 9.

NSE has set out to list its shares at the bourse after opening the shareholding beyond the traditional brokers. The process has been long-winding with brokers feuding with the government over what stake to give State.

The NSE listing will see the founder members reduce their shareholding.

The securities exchange is currently owned by 22 member firms that control 90 per cent of the shareholding, while the Treasury and the Investor Compensation Fund jointly own the remaining 10 per cent.

The stake held by the 22 shareholders is expected to be reduced by 40 per cent within three years after listing.