Investing public to own stake in 60-year-old Securities Exchange

By James Anyanzwa

Nairobi, Kenya: Kenyans can now own a stake in the Nairobi Securities Exchange (NSE), which will be offered to the public in two months time.

This comes after stockbrokers and investment banks agreed to sell part of the bourse to the investing public. This marks the culmination of the demutualisation process that has been in the pipeline for close to six years. NSE Chief Executive Officer Peter Mwangi said the Initial Public Offering (IPO) would give Kenyans the opportunity to own a piece of the 60-year-old exchange.

Mr Mwangi said details on the number of shares on offer, pricing and use of the proceeds would be documented in the prospectus.

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“We are in agreement with the regulator on all issues which were outstanding. We expect our transaction advisors to complete their work so that we can list through an initial public offering before the end of June this year,” Mwangi told reporters in Nairobi yesterday.

He said the official application for demutualisation of the NSE has already been submitted to the Capital Markets Authority (CMA) whose approval is critical in driving the process forward. Mwangi said the exchange has already complied with all the demutualisation regulations.

“We expect CMA to come back to us with formal approval for the demutualisation process,” he said.

Financial Statement

The announcement of the planned listing of the exchange comes as NSE recorded significant improvement in its financial performance for the year 2013 fuelled by improved activities on the equity market and diversified income streams away from traditional transaction levies and fees.

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According to the financial statements released yesterday, the bourse’s profit before tax (PBT) jumped 198 per cent to Sh379.34 million from Sh127.38 million in the previous year. Total revenues surged 62 per cent to Sh622.71 million from Sh384.32 million. “Our strong financial performance in 2013 was a result of the very strong market performance and the efforts of management to diversify revenue streams from the traditional sources of transaction levy and annual listing,” said Mwangi.

NSE’s new sources of revenue include sales of publications, provision of services through the Broker Back Office (BBO) and data vending.

 The Exchange is also tapping into rental income after its acquisition of a prime commercial property in Nairobi’s Westlands area. The move is part of NSE’s five-year (2010-2014) strategic plan to shore up its revenue base, diversify income streams, boost liquidity in listed securities, attract new listings and transform the bourse into a force to reckon with within sub-Saharan Africa.

During the period under review, the value of shareholders’ wealth dubbed market capitalisation rose 50 per cent to Sh1.92 trillion while equity turnover grew 79 per cent to Sh155.75 billion from Sh86.79 billion. Aggregate growth was however dented by a 20 per cent decline in bond turnover, which fell to Sh452.46 billion from Sh565.67 billion in the previous year. The board of directors proposed payment of a first and final dividend of Sh2 per share, amounting to Sh49 million.

Nairobi Securities Exchange Initial Public Offering Peter Mwangi