Shares in Kenya’s first Sharia compliant investment firm will be introduced to the Nairobi Securities Exchange (NSE) Thursday at a list price of Sh1,250.
Kurwitu Ventures, which is listing just 102,272 ordinary shares with a par value of Sh100 each, will become the NSE’s priciest stock beating British American Tobacco (Sh1,000) and Limuru Tea (Sh1,020).
According to a statement prepared ahead of the November 13 admission of its shares into the NSE’s Growth Enterprise Market Segment, the list price is set at a 16 per cent premium on the firm’s Net Asset Value per share of Sh1,075.
The firm says the listing price has been determined on the basis of the more conservative Net Asset Value, rather than a Discounted Cash Flow valuation, due to “uncertainty related to forecasting future cash flows for Kurwitu Ventures”. The price was deliberately set high, they add, in line with international best practice to discourage uninformed investors from putting money in a high-risk investment without sufficient diligence.
The company, which did not report any profits in the last two years, is valued at about Sh150 million for the listing. It's main assets are three parcels of land in Lamu county bought last year for Sh110 million and now valued at Sh120 million.
Kurwitu Ventures hopes to pioneer various investment products, services and real estate deals that adhere to Islamic Sharia Law. These include various asset backed securities and real estate investment products.
“While the key investment focus is on agriculture, Kurwitu Ventures will also invest in other ventures that meet the key Sharia compliance test,” a note by Chairman Abdikadir Mohammed in the listing statement reads. “Kurwitu may also provide investment products jointly with others.”
Investors looking to buy in would have to raise at least Sh125,000 for a toe-hold.
“Raising capital from the public is not the top priority,” the firm explains in its listing statement. “As such, Kurwitu Ventures has opted to list by way of introduction. This will provide existing shareholders price discovery and liquidity while setting the foundation for a broader shareholder base.”
The company hopes to raise Sh400 million over the next three years by private placement to go into “early stage equity investments” and continue to seek out corporate finance advisory deals.
It also plans to partner with other firms in three pass-through instruments a year, averaging Sh400 million, with a target success fee of 1.5 per cent.