CMA eyes acquisitions to unlock IPO drought at Nairobi bourse

CMA Chief Executive Wycliffe Shamiah. [File, Standard]

The Capital Markets Authority (CMA) is set to licence Special Purpose Acquisition Companies (SPACs) to unlock a decade-long drought of public offerings at the Nairobi bourse.

CMA Chief Executive Wycliffe Shamiah said in Nairobi yesterday the regulator is reviewing regulations on public offers, listing and disclosures as well as those regulating private equity firms to ease the listing process for firms.

“We have finalised the drafts, and they should be going out to the public in a few weeks from now,” he said.

“We feel that once these are exposed and taken through the normal process, we shall see quite a bit of interest around listings in the Nairobi Securities Exchange (NSE),” he said.

SPACs are entities with no commercial operations or business models but are created to raise capital through initial public offerings (IPOs) and merge with or acquire existing companies that are looking to list. SPACs are favoured in mature capital markets such as the US and Hong Kong as a shorter route for firms to list their shares without executing an IPO.

SPACs are created to raise capital through initial public offerings (IPOs). [File, Standard]

“We are expanding provision for initial public offerings to include SPAC IPOs as we seek to limit the time it takes to come to the market for companies that opt to use this capital-raising option,” said CMA in its latest edition of the Capital Market Soundness Report.

According to the regulator, Russia’s invasion of Ukraine led to a Sh92 billion loss at the NSE. Coupled with the August polls, this has led investors to adopt a wait-and-see approach to the equities market.

“In the recent past, foreign investors have been withdrawing from the market due to the uncertainties associated with the upcoming elections,” said the CMA report.

“The withdrawal of the blue-chip stock, which are common with foreign investors, has pushed the bourse further down to a seven-month low,” said the regulator.

According to the report, foreign investor participation levels for March fell to a record 47 per cent, from an average of 58 per cent recorded last year.