Nairobi Stock Exchange pushes expansion plans with more listings in 2021, says CEO

By Charles Abuede

• East Africa largest bourse in talks with national treasury for the sale of more stakes in government-owned enterprises

The chief executive officer of the Nairobi Stock Exchange has revealed the plans of the exchange to expand the Kenyan market with four publicly traded firms in 2021 and many other corporate bonds in the year it has termed as its best year of new listings.

Geoffery Odundo, Nairobi Exchange’s chief, said the new equities listings will come from Ibuka, the bourse’s incubator programme. “From among the 26 companies on Ibuka, two will be listed on the NSE’s Main Investment Market Segment and another two on the Growth Enterprise Market Segment,” he explained.

He added: “This year we will be more aggressive, more focused on getting them on board. The NSE has a good proposition for small businesses to raise capital through bonds and equity sales in the post-coronavirus period”.

The Kenyan local bourse boss further revealed that the NSE is in talks with the National Treasury to put up for sale additional stakes in listed state-owned companies, with the view to raising as much as 300 billion shillings or $2.7 billion as the exchange looks to ramp up activity partly by raising shares available for trade.

According to the industry regulator, more fresh deals in the bourse saw Homeboyz Entertainment Ltd. conclude a listing by introduction in December 2020 and Stanlib Fahari I-REIT with an initial public offering (IPO) in 2015.

Furthermore, the outstanding quantity of corporate bonds was 21.9 billion shillings as at the close of September 2020, compared with 49.2 billion shillings in the previous year.

Scheduled for opening in February 2021 is the bourse’s Unquoted Securities Platform which is modelled similar to the NASDAQ arrangement to welcome the admittance of another four firms to the platform as the exchange seeks more ETF providers to grow the market, Odundo pointed out, noting that the gold exchange-traded fund was the exchange’s best performing asset class in 2020 with the unit price rising by 62 per cent to 2,100 shillings.

Further speaking on the exchange’s plans, Odundo hinted that the exchange intends to begin day-trading within the first three months of 2021. He said it is a plan that is expected to raise the turnover ratio to at least 15 per cent from 7.9 per cent. Though, day-trading will be accompanied by securities lending and borrowing, which is anticipated to release more shares held by locals for trading. Meanwhile, about 75 per cent of shares are held by local investors in the market, while most of the trades are in the 25 per cent in the hands of foreigners currently.

In his words, “If we can unlock another 25 per cent from investors like pension schemes and push that total liquid float to 50 per cent, won’t you see us doubling the turnover? We have engaged with the regulator and the Central Depository and Settlement Corp., and come up with a model that will be able to make day-trading achievable,” he stated.