Stanlib bid beats target by Sh1bn

Capital Markets Authority CEO Mr Paul Muthaura (left), Stanlib regional director James Muratha (centre) and Stanlib Fahari I REIT CEO Mr Anton Borkum at the NSE head office on October 22, 2015. After a false start, Kenya’s first-ever Sh2.6 billion Stanlib Real Estate Investment Trust (I-Reit) received an overwhelming subscription. PHOTO | COURTESY 

In Summary

• The offer scheduled for closure on November 12 was extended to November 18, with the Capital Markets Authority saying the move was aimed at encouraging retail and institutional investors to consult further before making their bids.
• The CMA regulations require that the funds be used to buy an income earning property such as a residential or a commercial estate where 80 per cent of the rental income will directly be paid out twice a year to shareholders.
• All applicants will get their full share as applied for, with institutional investors taking the largest stake of 58 per cent, foreign investors (24.84 per cent) while retail bidders were allocated 17.05 per cent.

By JAMES KARIUKI
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After a false start, Kenya’s first-ever Sh2.6 billion Stanlib Real Estate Investment Trust (I-Reit) received an overwhelming subscription. The sale, which had to be extended by a week, closed Sh1 billion over the target.

The offer scheduled for closure on November 12 was extended to November 18, with the Capital Markets Authority saying the move was aimed at encouraging retail and institutional investors to consult further before making their bids.

By close of offer period, Stanlib I-Reit received Sh2.1 billion from institutional investors in East Africa, Sh617 million from East Africa retail investors and Sh899 million from foreign investors to total Sh3.6 billion, a 138 per cent subscription.

Stanlib said it would use the proceeds to buy seed properties and pay set up costs, while the rest will be invested as per the Reit rules set out by the Capital Markets Authority.

The CMA regulations require that the funds be used to buy an income earning property such as a residential or a commercial estate where 80 per cent of the rental income will directly be paid out twice a year to shareholders.

All applicants will get their full share as applied for, with institutional investors taking the largest stake of 58 per cent, foreign investors (24.84 per cent) while retail bidders were allocated 17.05 per cent.

Stanlib said the shares would start trading today and described the oversubscription as a significant milestone in the development of the capital markets, unlocking the real estate sector and expanding investment products in Kenya.

All earnings from I-Reit units were exempted from paying duty to encourage more Kenyans to take up the units starting from a minimum of 1,000 priced at Sh20,000.

The Kenya Revenue Authority said the move is aimed at deepening the capital markets and enabling more people to enjoy assured returns, thereby deepening financial inclusion for a wider segment of the population.