Three new Gems listings—Flame Tree Group, Kurwitu Ventures , Atlas Development—and the NSE’s self-listing on the main market segment have been the highlights of the market this year, with the companies adding a billion new shares to the market.
The Nairobi Securities Exchange (NSE) is once again regularly ringing the symbolic listing bell with a flurry of debuts on its Growth and Enterprise Market Segment (Gems), bringing to a close a barren spell that saw a single company enter the bourse in 2013.
Three new Gems listings—Flame Tree Group, Kurwitu Ventures , Atlas Development—and the NSE’s self-listing on the main market segment have been the highlights of the market this year, with the companies adding a billion new shares to the market.
The NSE’s self-listing also saw the end of a three-year wait for an initial public offer (IPO), being the first since the Britam IPO in September 2011.
This has also brought into the hands of the public ownership of the bourse, previously held by a tightly controlled group of market intermediaries, which may have served to discourage entrepreneurs from listing small companies on the bourse.
IPOs were more common in the five-year period between 2006 and 2011, with eight being rolled out in the market, besides the Mumias second IPO in 2006.
“On the main market we haven’t seen too many listings coming through. We have however now become very aggressive in our marketing for new listings, especially after our self-listing. Our strategy in looking to bring in more companies because we want to increase the number of listed companies to 100,” said NSE chairman Eddy Njoroge.
“We at the NSE will, in the next few months, also be reaching out to owners of businesses, entrepreneurs, advisors and investors to create awareness of the advantages of listing on the Gems.”
In 2013, the Gems board was introduced amid much expectation of speedy and frequent listings that would also serve as a source of main market listings in the future.
However, for over a year after the introduction of Gems, only real-estate firm Home Afrika was listed on the segment.
The company’s subsequent share price fall to about a third of the listing price of Sh12 ushered negative sentiment of the segment.
Explaining the increase in the number of Gems listings towards the end of the year after a lull, Mr Njoroge said a majority of companies seeking to come into the market under the segment required a lot of preparation in terms of corporate governance, structures and board meaning bringing them up to speed took time.
This is unlike big and established companies like Safaricom and KenGen that seek listings on the main market segment, which usually have their governance and structural requirements in place thus allowing for relatively quick listing.
Regular listings whether on the Gems or main market segment would bode well for the NSE in terms of listing fees coming at a time when the exchange will be under pressure to provide higher returns now that it is publicly listed with thousands of new shareholders.
The diverse nature of the new listings on the Gems segment also offer investors new investment options. Kurwitu is the first company offering Shariah-compliant investments to be listed on the bourse, while Atlas offers investors the first option of investing in a logistics company in the upstream oil sector.
With a target of three or four new GEMS listings a year as per the Capital Markets Authority 10-year master plan, the segment could within the next few years emerge the most vibrant in the market.
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