The Nairobi Securities Exchange (NSE) is preparing for key Initial Public Offerings (IPOs) in 2019 as a move to put an end to a 10-year long drought in the stock market.
In order to raise more than 100 billion shillings, the National Oil of Kenya will be listed dually on the NSE and the London Stock Exchange (LSE).
The strategy is aimed at raising funds to grow the oil industry in Kenya and as the government is seeking to sell a stake in the state-owned company, several investors are bound to acquire some shares.
Plans for privatization of 26 parastatals for raising funds to supplement deficits in the country’s budget had been announced in 2018. This is where the second tranche of IPOs is expected to come from.
On Thursday 31, NSE is expected to hold talks with the Privatisation Commission, a body that nodded to the sale of the 26 poorly performing state-owned corporations to minimize government spending.
The two will identify potential IPO’s from major companies from the ones marked for privatization including Kenya Meat Commission, Development Bank of Kenya, Kenya Pipeline Corporation, Kenya Ports Authority and five sugar millers — Chemelil, Sony, Nzoia, Miwani, and Muhoroni.
NSE is looking to enhance its market operations after a bear run in 2018, which was occasioned a capital flight by foreign investors on the strengthening of the US Wall Street at the back of wobbling domestic market.
The last time a major IPO was offered in Kenya was in 2008 when Safaricom Plc went public. More than 860,000 applicants were attracted to the offer and it became one of the biggest market activities in East Africa with an oversubscription of 532 percent.
Co-operative Bank, KenGen, and Britam also made notable IPO offerings between 2006 and 2011 when the stock market recorded about 8 major IPOs.
According to the chief executive of NSE, Geoffrey Odundo, the bourse is gearing for major offerings, among them the cross-listing of the National Oil Corporation in 2019.
“This year, we want to focus on getting IPOs. We are engaging all companies that have interest in IPOs,” Odundo said in Nairobi during a briefing on 2019 outlook.
NSE is also banking on the “Ibuka” program launched on December 17, to attract more listings.
Tuskys Supermarket is also expected to sell a stake to the public this year as it looks to expand its reach. Also, today, the bourse is bound to host the retailer under the Ibuka program.
Ibuka is an incubation and acceleration program aimed at unlocking the potential of SMEs while scaling up their business through NSE.
Under the program, companies learn how to bolster their financial, technical, operational, commercial and strategic aspects of businesses. It also allows the SMEs to raise funds via equity markets and debts.