By JACKSON OKOTH

Trading volumes remained low at the Nairobi Stock Exchange (NSE), leaving thousands of investors scratching their heads over what to do with shares and portfolios whose value has been deeply eroded.

While the more risk-averse investors have diversified from equities to cash, bonds and other liquid assets, there are those who have taken a long-term view and are willing to wait for activity at the bourse to pick up.

But perhaps the hardest hit group by a depressed NSE are investment banks and stockbrokerage firms, who derive their incomes from commissions charged on volumes traded at the exchange.

So far, the bear market has seen two stockbrokers shut down, another — Discount Securities – is facing possible liquidation. The list of those seeking for buyout deals or selling stakes to commercial banks is growing, as many these 20 brokerage houses hang on through painful restructuring and cost cutting measures, to remain in business.

"Right now, business is so low and we are forced to eat into the shareholders’ funds," Wachira Nguru, chairman of Suntra Investment Bank Ltd told a press briefing recently. With a turnover of Sh6.4 billion as at 2008 and a market share of 3.3 per cent, Suntra Investment Bank is now a pale shadow of its former self.

Over the last one month, Suntra Investment Bank has shut the door on 11 of its senior managers, cut down on office space at its prestigious Nation Centre headquarters and is looking afresh at its business model.

Sources close to the firm disclosed that part of Suntra’s liquidity problems stem from its exposure to the Safaricom IPO where some Sh50 million in refunds is still locked up at Citibank NA Kenya, which was the principal receiving bank for the IPO.

Safaricom IPO

With over 80,OOO Central Depository System account holders and 130 shareholders portfolio, Suntra Investment Bank is among a list of those who burnt their fingers in the Safaricom IPO.

"About Sh251 million is still locked at Citibank. It’s important to emphasis that most stockbrokers have had to pay some refunds using their office cash and they are yet to receive the settlement from Citibank," says Jane Njeru, CEO Kenya Association of Stockbrokers and Investment Banks (KASIB).

"Consequently, it’s obvious that if Citibank frees the cash, stockbrokers’ liquidity no doubt improve," she says. At the height of its corporate power and influence in the stockbroking business, Suntra Investment Bank was the epitome of a new breed of entrepreneurs challenging the entrenched self-interest of the NSE elite firms.

Considered a lightweight, Suntra Investment Bank was able to curve a niche for itself in the corporate investment banking business, leading to speculation that its then CEO James Murigu, an outsider in the wealthy golf playing investment bankers circles, could replace Jimnah Mbaru as NSE boss. Well, that never happened and the rest is now history.

Admitted to the NSE 15 years ago, Suntra Stocks Limited first operated as an agent and stockbroker in 1990s, obtaining an investment bank license in 2004.

Within a space of three years, Suntra Investment Bank Limited under James Murigu moved fast to clinch several lucrative deals including financial advisory and sponsoring stockbroker in IPOs, rights issues and private placements of shares and bonds by government and private companies.

With an authorised share capital of Sh 100 million, Suntra has been involved in numerous high profile transactions, taking full advantage of growing status to build its brand name.

Among its most memorable deal is joint financial advisor and sponsoring broker during listing of more than 90 million Equity Bank shares.

Publicity and briefing

The successfully listing of Equity Bank is attributed partly to the publicity and the investor briefing that Suntra Investment Bank Limited handled.

But it is the KenGen IPO that firmly put Suntra on the corporate landscape. Kenya Electricity Generating Company (KenGen) appointed Suntra Investment Bank as the sponsoring stockbroker for the retail stream.

With over 659 million shares on sale, Suntra went on a road show targeting retailers leading to 350 per cent oversubscription in an issue that raised the largest commissions in the NSE history.

Outside the banking system, Suntra has been one of the largest placement agents in the bond market.

Among transactions that it has been involved in include East African Development Bank, Celtel, Faulu Kenya, Shelter Afrique and Safaricom corporate bond issues.

The exit of Murigu from the helm at Suntra has knocked the wind from the sails of the investment bank.

His replacement as CEO is former General Manager-Operations and Investment Banking at the firm. Gichohi is a career banker and economist having joined Suntra from Commercial Bank of Africa (CBA) after working for 10 years in a senior position.