By Tosin Sulaiman
The Nairobi Securities Exchange is planning a share market listing of its own in the first half of 2013, completing a lengthy process of demutualisation, its chief executive told Reuters on Tuesday.
The bourse, the fourth largest in Africa, also plans to launch a Treasury bond index by September this year, which will pave the way for index-linked products such as exchange traded funds, Peter Mwangi said on the sidelines of an investment summit in London.
Since the exchange began efforts to demutualise in 2005, the NSE has registered as a company and changed its name from the Nairobi Stock Exchange to the Nairobi Securities Exchange.
The next logical step is to list, said Mwangi, adding that it would result in greater transparency, better governance and increased investor confidence, among other benefits.
“Hopefully, we will be ready to do it in the first half of 2013,” he said. “We’ve got approvals in principle from our shareholders. We’re working now to put together the transaction advisory team.”
Mwangi said demutualisation would give the NSE a greater self-regulatory role and allow it to raise capital from the market. He said a listing by introduction, where no new shares are sold, would be quicker than an initial public offering.
The NSE, which has a market capitalisation of $12.76 billion, hopes to launch a Treasury bond index in partnership with the FTSE Group by the end of third quarter, Mwangi said, adding that technical issues had delayed the project.
He said the index would provide investors with a benchmark against which they could evaluate the performance of their bond portfolios and would also be the basis for exchange traded funds and other index-linked products.
It could also attract more foreign investors to Kenya’s bond market, which is the largest and most developed in the east and central African region. There are 68 Treasury bonds and 19 corporate bonds listed on the NSE.
FTSE LINK
“I think having a brand like FTSE should also draw attention to our markets by global investors,” he said. “We’re hoping that international participation in the bond market will also increase.”
Mwangi said he expected two more companies to list before the end of the year, which would bring the total to 62. CIC Insurance listed on the main market in July after shelving plans for an initial public offering and Longhorn Publishers listed on the alternative investment market in May.
He said domestic retail and institutional investors have been returning to the market, which was the third best performing stock market globally in the first six months of this year, after Venezuela and Egypt.
Local participation was likely to increase further as interest rates decline, he said.
“As interest rates moderate and investors switch back to equities we expect to see that rally continue,” he said.
A new market for small- and mid-cap companies, known as the Growth Enterprise Market Segment (GEMS), should be operational by the end of the year as the regulatory framework is now in place, Mwangi said.
The NSE is targeting companies with a turnover of between $1 million and $15 million and is aiming for 5 to 6 listings on GEMS next year.
Source: Reuters
