NSE chairman Eddy Njoroge (from left), Vision 2030 Secretariat
director-general Mugo Kibati and Home Afrika chairman Lee Karuri during
the bell ringing ceremony, marking the company’s debut at the NSE on
July15, 2013. Photo/Salaton Njau
By CHARLES MWANIKI
Home Afrika stock has fallen to just over half
of its listing price of Sh12 signalling a sharp decline in value for the
shareholders.
The pioneer on the Growth and Enterprise Market Segment (Gems) of the Nairobi Securities Exchange (NSE) joins two other recent listings in trading under the initial offer price.
“The real-estate firm has seen its share price drop sharply after announcing that it would issue a REITS (Real Estate Investment Trusts) to fund one of its developments,” said Standard Investment Bank (SIB) in a note to clients.
SIB had noted in an earlier report at the beginning of the month that there was investor concern since the firm had not stated whether it had adequate funding for its planned projects and could need to borrow or raise funds through a rights issue.
Transcentury, which listed at Sh50 in 2011, is now trading at Sh30 per share and Britam, too a 2011 listing, is at Sh8.10 from Sh9. Longhorn, which listed in 2012 at Sh14 per share, is now trading at Sh13.
Home Afrika’s share price has been on a gradual fall since its debut in mid-July when it traded at a high of Sh25, though on thin volumes.
The share has an almost 50 per cent downside on its listing price. But investors who bought at the Sh25 price are looking at a sharper drop of 76 per cent, attributed to price correction as well as selling pressure from shareholders.
Analysts had predicted that the firm’s relatively high price-to-earnings ratio was not sustainable.
“The price at listing was deemed expensive on the
basis of the high price-to-earnings and price-to-book ratios, and the
fall in the share [rice is a reflection of the market correcting this,”
said Kestrel Capital analyst Kuria Kamau.
Other shares that listed at the NSE in the last three years have returned mixed results, with some remaining below their listing price even as the market enjoys an extended bull-run since mid-2012.
Liberty Holdings (formerly CFC Insurance Holdings), which listed in 2011, has gained to Sh11.90 from Sh6.15. CIC Insurance,
which listed in 2012, has gone up to Sh4.55 from its listing price of
Sh3.50 as has Umeme, which has appreciated to Sh18.50 from its
introductory price of Sh8.80.
The NSE-20 Share index has seen a gain of 0.5 per cent to 4746 points between July 15 when Home Afrika listed and September 25.
Overall investor wealth at the bourse has increased by Sh32 billion to Sh1.756 trillion in the three months.
Home Afrika’s market value meanwhile has dropped
from the Sh10 billion reached on its NSE debut to Sh2.51 billion at the
close of trading Friday.
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