Nairobi Securities Exchange eyes acquisitions among other African bourses

PUBLISHED: Mon, 25 Apr 2022 17:00:40 GMT
Duncan Miriri
A company vehicle sits in a parking lot outside the headquarters of the Nairobi Securities Exchange Ltd. (NSE) in Nairobi, Kenya, on Tuesday, July 21, 2015. Kenya is a major technology hub and a key player in one of the most dynamic economic regions on the continent. Photographer: Waldo Swiegers/Bloomberg via Getty Images

NAIROBI, April 25 (Reuters) – Kenya’s Nairobi Securities Exchange NSE.NR is looking to buy up more stakes in bourses across Africa, its chief executive said on Monday, with a view to eventually becoming a pan-continental exchange.

The bourse, the fifth biggest by market capitalisation in Africa, already owns a 4.9% stake in neighbouring Tanzania’s Dar es Salaam Stock Exchange DSE.TZ, and is eyeing other bourses in countries like Nigeria and Botswana following their demutualisation, its CEO Geoffrey Odundo said.

“We can become a pan-African exchange in the long term, so we are looking at how we can use this opportunity,” he said. The group is keen to see the valuation of Uganda’s bourse when the shares are offered to investors at a later date, he added.

To fund acquisitions, the NSE has cash reserves of up to 1.5 billion shillings ($12.98 million), Odundo said.

The exchange is also looking at buying stakes in related businesses like technology and depository services, he said. “Acquisitions are a key focus for us,” he told Reuters.

Read more: World Bank approves $750 million in budgetary support to Kenya

As part of its strategy to acquire related businesses, the NSE has doubled its stake in Kenya’s Central Depository and Settlement Corporation, which offers back-office services for share trading, Odundo said.

The exchange, which for 2021 offered investors a 17% dividend yield, is also holding discussions with two Kenyan technology firms to boost its securities trading infrastructure, Odundo said, without giving details.

Africa, made up of 54 nations, has just 29 exchanges, meaning there will be opportunities to offer securities trading technology when the others set up their bourses, the CEO said.

The bourse was in a strong position to fend off competition from a new bond trading exchange being set up in Kenya, he said, since it offers many products, including derivatives. Read full story

The NSE is selling its head office in a Nairobi suburb in favour of leasing, Odundo said. “Property is not a space for us,” he added.

NSE turnover has been depressed in the past month by heightened geopolitical risk caused by the Ukraine crisis, he said.

Kenya is holding a general election on Aug. 9, which could feed volatility in the market, Odundo said. However, he expressed optimism that the adverse impact will be low.

“We are cautiously optimistic,” he said. “Investors have priced down the political risk.”

($1 = 115.6000 Kenyan shillings)

(Reporting by Duncan Miriri; Editing by Jan Harvey)

Sign Up for Our Newsletter Daily Update
Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.