CMA to relax listing fees to woo more firms to Nairobi Securities Exchange

Capital market Authority (CMA) from left Investor Education and Public Awareness Manager Samuel Njoroge, Regulatory Policy and Strategy Director Luke Ombara and Investor Education and Public Awareness Assistant Manager Konrad Afande addresses a press conference at their Office in Nairobi. PHOTO: BONIFACE OKENDO

Capital Markets Authority (CMA) is looking into ways of reducing the cost of listing at Nairobi Securities Exchange (NSE) in order to attract more companies.

According to CMA Director for Regulatory Policy and Strategy Luke Ombara, the regulator is in talks with about 70 companies as it seeks ways of cutting the listing drought witnessed in the bourse.

“Certainly there will be a reduction in cost. If we are going to get more listings, it will necessarily translate into consideration for further reduction in prices. We could also consider waiving some fees to stimulate this market,” Ombara said.

He added that despite a reduction in the eligibility requirements in terms of capitalisation, free float shares and the number of minimum shareholders, there are other costs, both monetary and non-monetary which the regulator may consider cutting. With this, Mr Ombara explained, there will be an increased difference in costs between listing on the main investment market and doing so on Growth and Enterprise Market Segment (Gems) that has so far attracted just five listings.

Paul Muthaura, the CMA Chief Executive said that the target is to increase listings on the Gems of NSE by three to four companies annually.

This will translate into approximately 40 additional companies by 2023 pushing the total firms to 105, in line with CMA’s master plan. Against this background, CMA is organising a two-day event dubbed Business Incubator and Accelerator on the Listing Experience on 30th and 31st March 2017 to give potential companies a feel of what it takes to list.

“Interested firms will have an opportunity to participate in a stage by stage, one on one, structured engagement with the CMA, NSE, nominated advisors, transaction advisors, lawyers, auditors, stockbrokers and investment banks to allow for confidential discussions on their readiness for listing,” Mr Muthaura said, while addressing the press at the regulator’s offices in Nairobi.

Areas of engagement will include identifying their business needs before listing such as appointment of advisors, required documentation and issue placement before getting regulatory approval. CMA has already identified private entities in both formative and fairly developed stages which it hopes to help them list on NSE.

Business incubators

According to Samuel Kamunyu, the CMA Manager for Investor Education and Public Awareness, 40 of the companies expected during the event are ready to list but just waiting for some information before signing up. Another category is of companies with the ambition of listing within five or ten years and will therefore be linked to business incubators to help them streamline their governance and growth goals.

Through this, CMA hopes to debunk some of the myths that could be holding back firms from listing such as fear of losing control especially among family-owned businesses.

The arrangement comes at a time when the market has turned bearish. However, Kamunyu said that CMA is hopeful that the market can get back to attractive levels after election period.