Home Afrika seeks to entice other SMEs to join bourse

By WINSLEY MASESE

NAIROBI, KENYA: Home Africa Ltd listed on the Growth Enterprise Market Segment (GEMS) at the Nairobi Securities Exchange in July last year as the real estate firm looked to raise much-needed capital for expansion.

However, no other player has listed at the NSE market since. The reasoning behind GEMS, which was launched in January last year, was to make it easier for growing companies to raise capital and benefit from a boosted profile and increased liquidity.

“We are the first company classified under the small and medium enterprises market to list at the stock market, but the performance hasn’t reflected fully the value of the shares,” said Mr Lee Karuri, the chairman of Home Afrika.

When the firm listed, its shares were offered at Sh12 each, but the price has since dipped, with the counter closing at Sh5.30 on Friday.

Still, Mr Karuri remains optimistic that the stock will appreciate on the back of increased campaigns being run on the real estate opportunities at the bourse.

Home Afrika is behind the multi-billion shilling Migaa Estate, a live-in golf community in Kiambu County, and is also developing Lakeview Heights (Kisumu County), Llangwe (Kwale County) and Kikwetu (Machakos County). 

On their listing, Karuri said: “This is a diversification from the traditional ways of raising capital, such as banks, and is outside the normal financial systems, in addition to building other opportunities. Listing was a way of liquidating our shareholders’ investment ... in return for cash.”

Mr Donald Ouma, the head of market and product development at the NSE, said two additional listings are expected this year following the intensified campaigns.

“We have been talking about the market segment to prospective client firms and registering entities that apply and comply with the listing requirements ... and expect an increase,” he said.

Medium and Small Enterprises Authority Acting Chief Executive Patrick Mwangi attributed the lukewarm reception to GEMS to a lack of data on companies that can list.

“If data is generated, segregated and companies favourably classified with the necessary documentation, then we could capture a particular class of medium enterprises that can list.”

The classification of Kenyan companies has largely been hinged on the International Labour Organisation (ILO) standardisation, which is in most cases based on the number of employees.

“In this digital age where robots and computers can perform some roles, even companies with less than 50 employees can have a huge turnover, but they would still be classified as small and this needs to change,” Mr Mwangi said.

The authority is working with the Kenya National Bureau of Statistics to generate data on the number of players in the SME sector.

Faida Investment Bank Chairman Bob Karina added that GEMS listing would increase firms’ returns.

“In a family business, for example, you eat the cake alone, but if you come to the stock market, you eat a part of the growth of the cake, which is bigger than the cake itself.

“There is need to sensitise entrepreneurs and businesses on other alternatives in raising capital for their expansion.”

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