Nairobi bourse hits record high on its IPO

by Elayne Wangalwa 0

The Nairobi Securities Exchange (NSE) has reported that its recent initial public offering (IPO) has been oversubscribed to 663.92 per cent.

The IPO which kicked off from 24 July to 12 August saw more than the intended 66 million new shares of the NSE purchased. Investors applied for 504 million new shares at a price of 9.50 Kenyan shillings per share.

The bourse has received 4.789 billion Kenyan shillings counter its target of 627 million Kenyan shillings garnering a subscription of 763.92 per cent, the most oversubscribed offer since the bourse was founded 60 years ago.

(READ MORE: NSE launches its initial public offering)

“We are very grateful to our 17,859 new shareholders for the confidence they have shown in our company. Their overwhelming support resulted in the offer being oversubscribed. The total subscription rate of 763.92 per cent is a new record for the Kenyan market. We would like to assure all our investors that the process of making refund payments is already underway and will be completed well before the shares start trading,” Eddy Njoroge the chairman of Nairobi Securities Exchange noted.

The NSE is on course to be listed within this financial year as earlier planned. The bourse’s shares will be listed on the exchange and commence trading from 9 September 2014. The self-listing of the NSE will be on the Main Investment Market Segment (MIMS).

The bourse is seeking to finance the acquisition of new generation technology that will provide the backbone for the listing and trading of new products.

The chief executive of the exchange, Peter Mwangi said, “The NSE has raised the capital it needs to implement its strategy. With the capital raised through the IPO, the exchange will make investments to support the introduction of new products such as REITS, ETFs and derivatives. With the support of our shareholders, we are confident that over the next four years, we will achieve our strategic objectives of 100 equity listings and four trillion Kenyan shillings equity market capitalisation.”

All investors who partook in the offer will receive a minimum of 500 shares on offer and subsequently additional new shares in multiples of 100 until all offer shares have been fully sapped.

The results of that IPO saw 17,859 investors participating in the offer.

(READ MORE: Kenya shilling holds steady as NSE begins offer for IPO sale)

According to Alistair Gould, head of trading at Old Mutual Securities, despite the small number of investors, the subscription level was ‘pretty impressive’.

“There has been an IPO drought for the longest time, the last listing IPO was Britam in 2011 but the subscription levels were very encouraging and it is a show of confidence in the market and definitely a positive signal. We are likely to see the price of the NSE move up on day one and subsequently on that we should see more investors come in,” Gould said.

Last month the bourse announced a 46 per cent year-on-year jump in its pretax profit for the first half to 158.2 million Kenyan shillings.