Uganda’s NIC in plan to cross-list at Nairobi bourse

A man monitors the electronic board at the Nairobi Securities Exchange. Uganda’s NIC is seeking to raise Sh290 million through the sale of 323 million shares. FILE 

By John Gachiri

In Summary

• National Insurance Corporation (NIC) set to become second Ugandan firm to cross-list at the NSE after Umeme.
• The firm is seeking to increase liquidity of its stock by taking advantage of robust trading at the NSE.

Uganda’s National Insurance Corporation (NIC) has announced plans to cross-list at the NSE, which could make it the second firm from the neighbouring country to have its shares trade on the Nairobi bourse after power distributor Umeme.

The Uganda Securities Exchange (USE) listed insurer is seeking to increase liquidity of its stock by taking advantage of robust trading at the Nairobi Securities Exchange (NSE) compared to the Kampala stock market.

Transaction advisors for NIC’s ongoing Sh290 million rights issue said that the proposed decision to cross-list its shares will also contribute to better discovery of the company’s market price.

NIC managing director Folayan Bayo said, during last week’s launch of the rights issue, that the option of cross-listing has been put on the table for consideration even though a firm decision has not been made yet.

“Cross-listing (is) one among several options that NIC is considering in order to increase liquidity of its shares, expand the pool of investors and to better align the NIC share price with the true value of the company,” said Crested Securities chief executive Robert Baldwin in an interview yesterday, recapping what Mr Bayo said on November 21

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Crested Securities, a Ugandan brokerage, and Kenya’s Standard Investment Bank are the transaction advisors for NIC’s rights issue.

“Cross-listing of the shares will tally with the vision of the company to become a fair provider of insurance, risk management and financial services in the company,” said NIC company secretary Elias Edu in an interview on Wednesday.

The proposed listing is also expected to make it easier for Kenyan investors, who participated in the insurer’s initial public offering (IPO) of 2010, to trade their shares.

The IPO, in which the government offloaded a 40 per cent stake, raised Ush7.2 billion. Data from Uganda’s Capital Markets Authority shows that in October 46.46 million shares traded on the USE, a tiny fraction when compared to the NSE where 30 million shares traded on Thursday alone.

NIC’s share price has remained flat at Ush35 (Sh1.20) between October and September this year. Kenyan investors will, however, have to convert their share certificates into electronic accounts to enable them trade.

At the time of listing the USE was still using paper certificates but it is phasing them out.

Anchor shareholders

“We encourage all NIC shareholders in Kenya or elsewhere to contact their stockbroker to open Securities Accounts and immobilise their paper share certificates,” said Mr Baldwin.

The insurer’s shares are mostly held by anchor shareholders.

As at the end of August the biggest shareholder was Corporate Holdings Limited, a company controlled by Nigerian insurer General Insurance Plc, with a 60 per cent stake.