Archive for the 'IPO' Category

BRVM securities exchange strategy dialogue with US frontier funds

New York, May 12: Sixteen new listings, spurred by privatizations and private equity fund exits, are a key target for Africa’s top-performing securities exchange. The Bourse Régionale des Valeurs Mobilières (BRVM), headquartered in Abidjan, Côte d’Ivoire, is among the world’s most successful integrated regional exchanges, linking eight West African countries (Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo).

In New York this week, 30 US frontier investors, stockbrokers and market specialists joined Mr. Edoh Kossi Amenounve, CEO of BRVM, in a strategic dialogue. Suggestions from the Americans included lower stockbroker commissions, more listings, liquidity, and stepping up listed company reporting to international financial reporting standards (IFRS).

The BRVM has 36 listed bonds and 39 listed companies, and expects four new listings in 2016, following initial public offers (IPOs). In 2015, the BRVM Composite Index rose by 17.77% making it Africa’s top-performing equity index to foreign investors.

Amenounve says: “Most of the economies are not badly affected by the oil price. They are growing through regional linkages. We saw 6.6% GDP growth in our markets in 2015 and expect 7.2% this year. BRVM is different from other markets as our currency, the CFA franc, is pegged to the value of the euro. We offer yield, without the high volatility seen in other African markets.”

The value of trading on the BRVM exchange rose 48% in 2015. Amenounve says local participation is growing even faster: “More and more citizens are becoming shareholders, which is the best way for our people to take ownership of our growth drivers and means of production. In 2012 foreign investors made up 55% of the trading, but the local share had risen to 75% by 2015, of much bigger trading volumes. In 2011, domestic collective investment schemes managed XOF 30bn of assets, but by the end of 2015 that was XOF 600bn, a 20-fold increase.”

Amenounve is leading plans to integrate five West African markets – Nigeria, Ghana, BRVM, Cape Verde and Sierra Leone – by 2020 to form Africa’s second biggest exchange after Johannesburg, with 273 listed companies and 233 brokerage firms. He has been Chairman of the West African Capital Markets Integration Council (WACMIC) since March 2015 and explained the three-step plan for integration:
* Phase 1 is sponsored access for brokerage firms, which was launched in July 2015 and has seen several transactions between Ghana and Nigeria.
* Phase 2 will be a “common passport”, giving a regional stockbroker direct access to any market.
* Phase 3 will be to follow the Euronext model, with a single trading platform and a single order book for all the markets.

The BRVM is Africa’s sixth securities exchange by market capitalization ($12.8 billion for equities and $2.7 billion debt) in 2015. It represents an economic area of more than 100 million consumers, with fast, diversified growth. See more at: www.brvm.org.

The meeting was organized by AZ Media in New York and ourselves, African Growth Partners Ltd.

Edoh Kossi Amenounve, CEO of BRVM exchange

Edoh Kossi Amenounve, CEO of BRVM exchange

Dar es Salaam Stock Exchange readies for $3.4m IPO and self-listing

DSE launched the modern STT trading system in 2014

DSE launched the modern STT trading system in 2014


The Dar es Salaam Stock Exchange Plc will launch its initial public offer soon, after successfully completing the demutualization that transformed it into a shareholder owned for-profit company. According to a statement from the regulator, the Capital Markets and Securities Authority, the bourse can raise TZS 7.5 billion ($3.4 million) by issuing 15 million ordinary shares at TZS 500 each.
No more details have been released, including a date for the IPO.
A statement from the CMSA, reported in the Citizen news, says: “The IPO and subsequent self-listing of the DSE Plc is the culmination of the demutualisation process approved by the National Demutualisation Committee comprising members from key stakeholders of capital markets in Tanzania including the Ministry of Finance, Bank of Tanzania, Tanzania Stock Brokers Association, DSE Plc and the CMSA.”
There are 23 companies listed on the DSE, which has a Main Board and 4 companies listed on the Enterprise Growth Market, launched in 2013. Total market capitalization of the listed companies is TZS 22.4 trillion ($10.2 bn)
It is the third African exchange to go through the demutualization and self-listing process after the Johannesburg Stock Exchange and the Nairobi Securities Exchange. CMSA said successful completion of the IPO and listing will help boost the issued and paid-up share capital; the active shareholding; improved corporate governance structure of a public company limited by shares. It will also raise funds for the market to grow and expand including introducing new products and services.
daressalaamse_new logoJan2016
DISCLOSURE – your editor worked with CAPMEX agency from Vienna and other team members to create the demutualization strategy for DSE.

Africa set for $3.1bn boom in IPOs

Law firm Baker & McKenzie forecasts that African initial public offers (IPOs) of shares will raise over $3.1 billion in 2016 with 15 IPOs in the pipeline. The firm says in a press release that Egypt, Nigeria and South Africa are likely to be the busiest exchanges, despite the commodity price headwinds, and that Africa’s fourth exchange for IPOs is.. London.

The 15 IPOs in the pipeline are set to beat the total raised in 2015 by 21 African IPOs by $1.5bn, nearly doubling the total raised that year and more than raised for the while period 2011 to 2013. The last time initial share offers raised this much capital was 2010, when $4.4bn was raised.

Deals include:
• Tanzania’s Dar es Salaam Stock Exchange plans to self-list this year
• Botswana Telecommunications Corporations Limited is Botswana’s biggest IPO so far and closed on 4 March
• Egypt has been building up a backlog of delayed deals and many could come to market in coming months, including retail, financial services and food sectors. The Government is also rumoured to be preparing the first privatizations of state owned enterprises since the programme was stopped in 2011, after a boom 2004-2006 when privatizations helped annual economic growth of 7%. One example could be state-owned United Bank of Egypt, a lender with assets of $3.6bn.
• Nigeria’s pipeline looks reasonable for later in the year in the tech, telco and transport sectors
• South Africa will see 2 or more deals, after 9 IPOs in 2015
• Mauritius continues to act as Africa’s offshore financial centre, equity offerings include rights issues and private placements as well as IPOs
• Rwanda predicts 3 IPOs this year
• Blueline is a west African train project which aims to list in Paris, promoted by French tycoon Vincent Bolloré
• Markets are watching with keen interest the progress by the East African Securities Exchange Association seeking to fast-track integration of their markets, which may unlock demand among issuers while increasing liquidity.

Most active sectors for last 5 years were power, real estate, financial services and healthcare. As the markets broaden, there is growing interest in consumer staples and technology, as the growing middle class demand more sophisticated services.

Koen Vanhaerents, Baker & McKenzie’s Global Head of Capital Markets, commented: “These are challenging economic times for those of Africa’s economies dependent on commodities for much of their income, while so-called “hot money” flows out of emerging market funds investing in Africa. So it is positive to see steady progress in Africa’s equity capital markets, with a strong pipeline so early in 2016 and potentially larger deals than we’ve seen for some time.”

baker+mackenziegraphics160307_IPOs

London remains the key global financial centre for Africa. Edward Bibko, head of B&M EMEA Capital Markets Practice, said: “There’s enormous pent up demand among issuers to conduct capital raisings, particularly in Egypt, which is showing strong growth and the emergence of a larger middle class. The wider continent still faces challenges and there is little local institutional investment or retail demand other than in the biggest economies. This means larger companies have to dual-list in a global financial centre like London, as well as their home market, to avoid volatility driven by the fact that skittish international investors make up the majority of market activity.” As mentioned earlier, Interswitch plans the first $1bn tech listing, probably a dual listing in London and the Nigerian Stock Exchange, although this may be delayed until early 2017. Mauritius headquarters Essar Energy raised $1.9bn, the largest sum ever by an African company when it listed in London in 2010.

Other equity deals include:
• Real estate fund Tadvest’s dual-listing in Mauritius and Namibia
• Mauritian retailer Compagnie des Magasins Populaires’ recently announced $4 million rights issue
• Atlantic Leaf Properties’ $70m private placement of equity listed on Stock Exchange of Mauritius.

This video broadcast on 7 March on CNBC features Wildu du Plessis, Partner at Baker & McKenzie, with some interesting ideas and very useful regional breakdowns.

Rwanda Stock Exchange expects 3 share offers (IPOs)

Rwanda Stock Exchange

Rwanda Stock Exchange, credit New Times.

Rwanda Stock Exchange, credit New Times.


The Rwanda Stock Exchange is expecting 3 initial public offers IPOs of shares in the coming months, which will bring the total number of equities listed for trading to 10. No details were disclosed, but the East African newspaper reports the 3 are among the most profitable in their sectors. Pierre Celestin Rwabukumba, bourse CEO, told Bloomberg: “We expect three initial public offerings this year. Due to disclosure restrictions I cannot tell you which ones.”
The East African’s Kabona Esiara wrote: “They are a bank where a principal investor is liquidating interests in order to venture into other businesses and a transport company that is seeking to fund acquisition of a modern fleet. A third company involved in logistics is looking for expansion capital. The latter two are classified as small and medium enterprises (SMEs).” The IPOs are said to be at an advanced stage, with the prospectuses going through Capital Markets Authority checks before roadshows in Burundi, Kenya, Rwanda, Tanzania and Uganda begin.”
Davis Gatharaa, managing director at Baraka Capital was reported saying: “2016 should witness increased market capitalisation, liquidity and turnover largely driven by new listings. We believe the Rwanda Stock Exchange offers a bargain hunting ground for foreign investors helped by a very strong dollar.”
IPOs on the RSE previously were Crystal Telecom (owns 20% of MTN Rwandacell) in July 2015, Bank of Kigali in 2014 and beverages firm (brewer) Bralirwa in 2011, launching the equity market. I&M Bank had issued a corporate bond in 2008. RSE statistics showed RWF34 billion ($45.5 million) in trading from January to November 2015. Market capitalization was RWF2.82 trillion ($3.75bn).
The market saw declines with the Rwanda Share Index down 21% but the All Share Index was down 3.9%. and the paper reports that analysts do not expect strong performance this year. Robert Mathu, CEO of the Capital Market Authority regulator, was reported saying: “Weak global commodity prices weakened the economic outlook for most of sub-Saharan Africa. Coupled with the currency bleeding that was experienced by most of these African countries, this led investors to adopt a wait-and-see approach on African stockmarket prices.”
When the bourse was launched the Capital Market Advisory Council said in 2011 that government planned to offer shares in 6 companies on the domestic exchange, including Commercial Bank of Rwanda, now known as I&M Bank Rwanda, and Sonarwa Insurance. The New Times newspaper reported in April 2015 the government is planning an initial public offering of its 19.8% stake in the Rwandan unit of Nairobi-based I&M Holdings Ltd.
In a report on AFKInsider Rwakumba said the bourse is targeting new retail investors: “ We are focusing a lot on the demand side with specific attention on retail investors. We are increasingly getting more and more new investors; in 2015 we had a surge of new investors of 19.2%. We are to keep building on this momentum to entice new investment so that we don’t face challenges in supply and demand sides.”

Mwalimu Bank shares soar as Dar es Salaam enterprise market gains momentum

The market for small and medium size businesses is picking up momentum on the Dar es
Salaam Stock Exchange. Mwalimu Commercial Bank Plc was the fourth listing on the Enterprise Growth Market segment on 27 November, and Prime Minister Majaliwa Kassim Majaliwa spoke at the listing. The share launched at TZS500 ($0.23) after its initial public offer (IPO) and then soared by 40% to TZS700 on the first day of trading before gradually falling back to TZS665.

The IPO also registered a success for the mobile phone trading platform launched by the DSE in August 2015. DSE Chief Executive Officer Mr Moremi Marwa told Daily News that at the end of September, a month after the launch, some 700 investors used mobile phone trading. The paper says that because of the mobile platform, upcountry buyers outpaced Dar es Salaam residents in buying shares in the Mwalimu Bank IPO. It is good step forward for financial inclusion in Tanzania. The IPO was oversubscribed by 24%.

DSE CEO Moremi Marwa, (photo credit 24Tanzania)

DSE CEO Moremi Marwa, (photo credit 24Tanzania)

Previous EGM listings were Mkombozi Commercial Bank (December 2014), Swala Gas and Oil (August 2014, local exploration subsidiary of Australian Swala Energy), and Maendeleo Bank (November 2013). There are four registered nominated advisers to help companies apply to the EGM for listing and to sponsor their listing and compliance, employing a model based on London Stock Exchange’s Alternative Investment Market (AIM).

The EGM was launched in 2013 as part of a successful project backed by the Financial Sector Deepening Trust (FSDT).

The name of Mwalimu bank means “teacher” in Swahili and was also the affectionate honorific title for Tanzania’s founding President Julius Nyerere. The bank is supported by the Tanzania Teachers Union, which has 200,000 members according to this DSE press release.

It has not yet opened its doors as it needed a banking licence approval and to raise capital, before it can establish systems and procure core banking and other systems. CEO Ronald Manongi was reported in The Citizen newspaper saying it will start offering services in May 2016 with a branch at Samora Avenue in central Dar es Salaam and later at Mlimani City. It has a capital base of TZS31 billion.

Dar es Salaam Stock Exchange aims for IPO and self listing Q1 2016

Dar es Salaam harbour (Credit: Tom Minney)

Dar es Salaam harbour (Credit: Tom Minney)

Tanzania’s Dar es Salaam Stock Exchange (DSE) aims for an initial public offer (IPO) of its shares within 6 months followed by listing itself on the exchange. It has published a call for lead transaction advisor, sponsoring stockbroker and other experts to express interest by 21 July.

CEO Moremi Marwa told Reuters on 1 July that the aim is to improve governance and raise funds for expansion: “We expect to pick a lead transaction adviser probably within a month and the whole process of launching the IPO should take around six months to be completed.” The quantity of shares to be sold will be decided later. Funds would be used for upgrading trading infrastructure, among others.

The African bourse has 21 listed companies and total market capitalization of TZS 23.9 trillion ($10.9 billion) at 30th June. This includes 14 domestic listed companies with market cap of TZS 9.9trn. It also has listed bonds (corporate and government) worth TZS 4trn. There is potential for more listings for companies to raise capital through equity or bonds, according to Reuters which notes that lending rates at banks can be 18%-30%. In 2014 Tanzania scrapped controls on foreign ownership of shares in an effort to stoke demand on the bourse. Bloomberg notes that in 2014 the index gained 64%, making the exchange Africa’s best performer.

According to Marwa’s quarterly statement liquidity in the second quarter was up to TZS 285bn from TZS 278bn in the first quarter, representing 9% liquidity ratio on an annualized basis: “During Q3, 2015, we expect at least three listings: Mwalimu Commercial Bank, PTA Bank (for corporate bonds) and YETU Microfinance.” He added that priorities include introducing mobile and Internet trading on the platform; encouraging more listings; public education and awareness; integrating and synchronizing the DSE’s central securities depository (CSD) with that of Bank of Tanzania for government bonds trading.

Dar es Salaam Stock Exchange Ltd was incorporated in 1996 as a mutual company limited by guarantee. According to the website it has recently changed into a public company limited by shares and is renamed Dar es Salaam Stock Exchange Public Limited Company.

According to the DSE website: “The objective of these changes is to enhance DSE’s operational, financial and governance structures and capabilities so as it can efficiently execute its mandates in line with DSE strategic objective: i.e. to be the focal point for long-term capital raising by private enterprises and public sector within the economy via provision of efficiency infrastructure, systems and listing platform for multi-financial products.

“The invitation is for Expression of Interest (EOI) by eligible firms to provide the following consultancy services:
1. Lead transaction advisor
2. Co-sponsoring stockbrokers
3. Legal advisor
4. Reporting accountant
5. Public relations firm
6. Lead receiving/collecting bank.

The Nairobi Securities Exchange has successfully sold 38% shares in a $7.1m IPO which was oversubscribed many times in August 2014, and it self-listed soon afterwards. South Africa’s JSE Ltd did the same in 2006.

IPOs soar as Africa’s capital markets raise $11bn

• US$11bn IPO and FO proceeds raised in 2014 in African equity markets
• US$37.4bn proceeds raised from 2010 to 2014
• 24 African IPO companies listed in 2014

African markets excelled in terms of capital raising for business in 2014 with a total of $11 billion raised through a total of 24 initial public offers (IPOs) and also through further offers (FOs). According to the inaugural publication IPO Watch Africa 2014, released by PwC on 1 Feb, a significant portion of the 2014 capital raising came from outside South Africa, compared to previous years.

The PwC study covers the 5 years 2010-2014 and shows that the total money raised in 2014 was equivalent to the combined total for 2012 and 2013. The sum from IPOs alone was $1.7bn in 2014, up from $0.8bn in 2013. Listings on the Johannesburg Stock Exchange accounted for 32% of total IPO capital in 2013 and 44% in 2014.

Source: IPO Watch Africa 2014 by PwC

Source: IPO Watch Africa 2014 by PwC


Nicholas Ganz, PwC Africa Capital Markets Leader, said in a press release: “The performance of African markets was strong in 2014, with an increase in equity capital market activity of 40% in terms of volume of offers and 100% in terms of capital raised when compared with prior year activity.”

However South Africa accounted for 87% of the capital raised through FOs offers with a 50% increase in the number of transactions and doubled in terms of capital raised to $9.3bn, from $4.6bn in 2013.

Coenraad Richardson, PwC South Africa Capital Markets Partner, said of South Africa’s share of the market for further offers: “This is a reflection of the depth and stability of the South African listed company and investor base, underpinned by a securities exchange regulatory framework ranked number one in the world by the World Economic Forum’s 2014-2015 Global Competitiveness Report.”

The excellent report can be downloaded here and includes lists of the top 10 IPOs in 2014 and 2015, performance by exchange, share performance from the IPO to 31 Dec (the Egyptian Exchange’s Arabian Cement Co raised $109m and then soared 88%) and much other useful information.

Source IPO Watch Africa 2014 by PwC

Source IPO Watch Africa 2014 by PwC

The financial services sector (including real estate) was 57% of the combined IPO and FO volume, followed by industrial products & services, and consumer products. Growth in these sectors reflects Africa’s shifting economic and social demographics, including increasing urbanization and an emergent middle class. The resources sectors were a smaller proportion of 2014 activity.

The trend also shows “increasing global integration of businesses in Africa and the interest of international investors in opportunities in Africa” according to the report. Several top 10 IPOs in 2013 and 2014 had an international component, either foreign companies raising capital directly on African exchanges, or African companies marketing shares to international investors through dual listings or sales to qualified institutional buyers abroad.

During 2010-2014, African companies raised a total of $31.1bn through FOs on African exchanges plus another $1.2bn of FO capital raised by African companies on international exchanges. This included companies expanding their investor base via a secondary listing, as with the 2011 listing of Elemental Minerals on the Toronto Stock Exchange and the 2013 listing of MiX Telematics on the New York Stock Exchange under the Jumpstart Our Business Startups (JOBS) Act, as well as those raising further funds from existing international listings. Resources transactions are more prominent in “outbound” FOs compared to the African IPOs and FOs over the period 2010-2014.

Good prospects for 2015

The report notes: Further liberalization of exchange regulations in some key territories, such as Tanzania, as well as harmonisation of regional exchanges bodes well for continued growth of ECM activity in 2015. Other positive factors include expectations for continued exits by private equity investors, reforms to certain capital markets legislation, and growing investor confidence in and familiarity with African markets.

Darrell McGraw, PwC Nigeria Capital Markets Partner, warns that commodities prices and currency depreciation could lead to some “headwinds that may affect the momentum of the capital markets in Nigeria and other territories heavily involved in resources.” However, Nigeria already had an IPO in Jan 2015 and “has a strong pipeline of listings likely to be brought to market later this year.”

Source IPO Watch Africa 2014 by PwC

Source IPO Watch Africa 2014 by PwC

Total Senegal offers shares in IPO until 7 Nov for BRVM listing

BRVM in Abidjan (photo: AfricanCapitalMarketsNews.com)

BRVM in Abidjan (photo: AfricanCapitalMarketsNews.com)

Total Senegal is bringing the first initial public offer (IPO) of shares to the growing Abidjan-based Bourse Regionale des Valeurs Mobilieres (BRVM) since 2010, with shares on sale until November. Parent company Total Outre-Mer is selling 8.9% of the shares in the oil products company , in a share offer that began 8 Oct and closes 7 Nov.
Reuters quotes Odile Sene Kantoussan, chief executive of brokerage company CGF Bourse, based in Dakar, saying: “This operation … consists of the divestment of 290,000 shares held by Total Outre-Mer in Total Senegal’s capital..The shares will be listed on the (BRVM) alongside 22% of the capital representing the stake of minority shareholders, bringing the floating capital on the Bourse to 30.9%. ” The ordinary shares each cost XOF 12,000 (CFA franc) equivalent to USD 23.19, with a minimum subscription of 5 shares, according to this announcement by Compagnie de Gestion Financière (CGF Bourse), which is sponsoring broker and Société de Gestion Intermédiation (SGI) in a syndicate of 20 brokers placing the shares. Initial priority is giving to investors in Senegal before extending across the CFA zone. The shares have XOF 1,000 nominal value according to the information memorandum available here. The transaction value is XOF 3.48 billion ($6.7million).
Total has already listed its Ivory Coast subsidiary among the 37 companies listed on the BRVM which trades securities from 8 nations across the West African region.
According to another news report by Agence Ecofin, Gabriel Fal, Chairman of the BRVM and Edoh Kossi Amenounve, CEO, hosted a ceremony for the offering on 10 Oct. It reports that the BRVM’s market capitalization has soared past XOF6 trillion ($11bn) driven by demand for Sonatel – the previous Senegalese listing in 1998 – and capital increases by subsidiaries of Bank of Africa group.

Gabriel Fal, Chairman of the BRVM (photo: BRVM)

Gabriel Fal, Chairman of the BRVM (photo: BRVM)


In April Fal was reported to forecast other potential BRVM listings could include Ivorian banks, Banque Internationale pour l’Afrique de l’Ouest en Cote d’Ivoire and Societe Ivoirienne de Banque, 51% owned by Morocco’s Attijariwafa Bank, as well as Matforce, a Senegalese company which provides energy equipment, an insurance company based in Dakar and a Canadian gold mining company operating in Cote d’Ivoire.
After the sale and listing, Total Outre-Mer will own 23.1% and Total Africa Limited will own 46%.
See the CGF Bourse website for details on the share offer.

9 African IPOs in first half of 2014 raise $808m, passing all 2013

pic: Tom Minney

Arabian Cement IPO on Egyptian Exchange in May was 18x oversubscribed. pic: Tom Minney


Initial public offers (IPOs) on African stock exchanges for the first half of 2014 has raised capital totalling $808.5 million, compared to a total of $757.5m raised throughout 2013. The data show there have been 9 African IPOs in 2014 to 30 June, compared to 18 in 2013 and 10 in 2012 on stock exchanges in Casablanca, Dar es Salaam, Johannesburg, Nigeria and Tunisia when the total raised was $342.6m.
The figures are given in a blog in the Wall Street Journal, citing figures from consultant EY.
According to the WSJ blog, domestic and international pension funds and other corporate institutional investors are putting more cash into African markets. It highlights new money from Africa’s fast-growing domestic pension funds and growing confidence in African frontier market equities, quoting Joseph Rohm, portfolio manager at Investec Asset Management: “These are nascent capital markets and they are illiquid markets. But what has been encouraging is that, for the first time in a long time, we are starting to see more capital raisings.”
He attributed the IPO increase to an earlier boom in private-equity investments: “We have known for a long time that the amount of private equity in African markets—and more broadly in frontier markets—is unprecedented and we are starting to see those opportunities coming to public markets.”
Bourse de Tunis saw 2 IPOs in 2012, but this was up to 11 last year and 2014 is also looking strong. WSJ[ blog cites Slim Feriani, chief executive officer and chief investment officer of Advance Emerging Capital, a Tunisian, who said: “In the next 5 to 10 years we are bound to see more IPOs. As it stands, some of the hidden gems are still in private hands,”
The blog also quotes Razia Khan, head of African region research at Standard Chartered, who said Africa’s IPO activity tends to be concentrated in key markets with most big deals so far in 2014 in North Africa. She added the current listing boom is evidence that the African markets are still recovering from the shock of the financial crisis in 2008: “The IPO activity lagged this recovery in growth—it’s not surprising that we’re seeing a rise, but the scale of it is interesting.”

Nairobi Securities Exchange IPO closes 12 Aug

Significant dates
24 July – IPO opens
12 Aug – IPO closes
4 Sept – Share allotment announcement
9 Sept – Self-listing ceremony
nairobisecuritiesexchange_NSE21

The Initial Public Offering (IPO) of the Nairobi Securities Exchange Limited (www.nse.co.ke) is open until 12 August. The NSE is seeking to raise KES 627 million ($7.14m) by selling up to 66,000,000 new shares (some 31% of the equity) at a price of KES 9.50 per share. The offer is open to domestic and international investors.
The IPO will culminate on 9 September with the self listing of the NSE on the Main Investment Market Segment (MIMS), making it Africa’s second security exchange after the Johannesburg Stock Exchange (www.jse.co.za) to demutualize and list itself.
Mr. Henry Rotich, Cabinet Secretary for the National Treasury, said during the IPO launch ceremony on 23 July (see press releases here): “One of the key objectives of the Capital Markets Master Plan is to build on recent market reforms to address regulatory and institutional constraints in order to strengthen market infrastructure, intermediation, oversight and governance standards. The demutualization and self-listing of the NSE form part of the government’s policies to enhance governance standards and facilitate access to our markets by a wider community of investors. “
Mr. Edward Njoroge, NSE Chairman, said: “The success of our country and the region will be mirrored both in our market and our company, the NSE. We urge all Kenyans, and other investors both far and wide, to embrace this offer with the confidence that Kenya’s growth and future success will, in many ways, be accelerated through the development of our capital markets.”
The minimum number of shares available for purchase is 500 at a cost of KES 4,750.00 (approximately $54). Thereafter purchases are in multiples of 100 shares.
The NSE is celebrating its 60th anniversary and the demutualization and share offer have taken 5 years until the Capital Markets Authority approved all in June.

Is the NSE IPO a bargain? Analysis by Ryan Hoover

Ryan Hoover of the excellent Investing in Africa blog (www.investinginafrica.net) has published his analysis of the NSE IPO here, it is well worth reading. He looks at the NSE income and expenses in the prospectus, and shows that transaction levies (fixed at 0.24% of total trade value, i.e. 0.12% on each side) are the main source of income, earning the NSE KES 405m in 2013. He breaks down the baseline earnings to come with an after-tax figure of KES 0.80 per share, giving the offer a price/ earnings (P/E) ratio of 11.8x.
Since Kenyan bonds currently yield around 11% he looks at future earnings, noting that trading volumes are up 37% in the first half of 2014. Using a forecast growth in earnings per share of 20% he believes the shares could be worth KES 19.90 in 2019 at a P/E ratio of 10x (the JSE is on P/E of 16x) and adding in dividends at KES 0.25 per year (the current level adjusted for the IPO) he sees the potential annual return at 17.4%.
Check out his excellent blog, also for the discussion following the article, which points out that the offer is likely to be over-subscribed.