NBV shares up 60pc one week after listing on Nairobi bourse

The K-Shoe shop along Kenyatta Avenue in Nairobi on March 28, 2016. FILE PHOTO | SALATON NJAU |  NATION MEDIA GROUP

By JAMES ANYANZWA

In Summary

• Nairobi Business Ventures’ stock on the Nairobi Securities Exchange rose 60 per cent to a high of Ksh8 ($0.08) per share last week, as news of its planned expansion into the manufacturing business reverberated in the market.
• Analysts said the plan to move from retail to production of leather products is critical for the company to fight competition and ensure its long-term stability.
• NBV plans to establish a leather footwear and accessories manufacturing plant in Kenya.

Nairobi Business Ventures’ stock on the Nairobi Securities Exchange rose 60 per cent to a high of Ksh8 ($0.08) per share last week, as news of its planned expansion into the manufacturing business reverberated in the market.

The shoe and leather products retail company listed 23.6 million shares on the Growth Enterprises Market Segment (GEMS) of the Nairobi bourse at an introductory price of Ksh5 ($0.05) per share, giving the company a valuation at the time of Ksh118 million ($1.18 million).

Analysts said the plan to move from retail to production of leather products is critical for the company to fight competition and ensure its long-term stability.

“The idea of moving into manufacturing is commendable; a company that controls its value chain is more reliable in the long run,” said Eric Musau, a research analyst at Standard Investment Bank.

“Retail alone is not a very strong foundation for a company to rely on,” he added.

According to the company’s board, listing on the stock exchange will enable investors to monitor the growth of the company and position themselves to participate in raising capital to finance it’s expansion into manufacturing.

NBV plans to establish a leather footwear and accessories manufacturing plant in Kenya.

“NBV will expand its presence first through retail expansions and invest in backward integration into manufacturing,” said Alfred Kithusi, the chairman of NBV.

In May, an additional 5.6 million shares, equivalent to 23.7 per cent equity stake of NBV, were issued to new shareholders through a private placement.

More visibility

The move brought the issued share capital to 23.6 million shares, and brought on board 26 new individual minority shareholders.

“For NBV to have come into the market at this point gives them more visibility. Listing through introduction does not give them additional capital, but it provides an opportunity for investors to evaluate the company’s products and business model and the industry it is operating in as a whole,” said Daniel Kuyoh, a senior investment analyst at Alpha Africa asset managers.

“The listing has positive sentiments for companies looking to open up their books and operations to the public,” he added.

NBV was established as a shoe and leather accessories retailing business, and opened its first outlet in June 2012 at Nairobi’s Village Market mall.

The company has since opened six retail outlets in and around Nairobi operating under the brand name K Shoe.