No offers in two years as NSE suffers IPOs drought

Investment brokers at the NSE. FILE PHOTO | NMG 

By JAMES NGUNJIRI

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Summary

• In the last five years, the NSE has only been able to raise Sh4.2 billion ($42 million) through two IPOs offered in 2014 and 2015 raising Sh700 million and Sh3.5 billion respectively.
• In contrast, elsewhere on the continent, 2017 saw some significant increases in IPO value on exchanges in Namibia, Rwanda and Tanzania compared to 2016.
• This increased activity can be attributed to a combination of continued efforts by governments to either privatise stakes in state-owned entities or encourage local companies to list on domestic exchanges.

Kenya capital markets lagged behind peers in Africa in Initial Public Offers (IPOs) and other secondary listings in the last five years, a new report shows.

According to the 2017 Africa Capital Markets Watch by PricewaterhouseCoopers (PwC), the Nairobi Securities Exchange (NSE) had no IPOs raised in either 2016 or 2017.

In the last five years, the NSE has only been able to raise Sh4.2 billion ($42 million) through two IPOs offered in 2014 and 2015 raising Sh700 million and Sh3.5 billion respectively.

“There were also no IPO activity in 2017 in Ghana compared to 2016, which saw $102 million raised on the Ghana Stock Exchange.

This year, the Nairobi Securities Exchange and Nigeria Stock Exchange both extended their IPO drought, with no new IPO capital raised in either 2016 or 2017,” the report said.

In contrast, elsewhere on the continent, 2017 saw some significant increases in IPO value on exchanges in Namibia, Rwanda and Tanzania compared to 2016.

This increased activity can be attributed to a combination of continued efforts by governments to either privatise stakes in state-owned entities or encourage local companies to list on domestic exchanges to build local market participation, and in certain situations, regulatory requirements compelling certain companies in certain sectors to list.

READ: Nairobi bourse IPO drought persists into the New Year

Over a five-year period, the vast majority of Further Offer (FO) activity (which include rights issues and second public offering) took place in South Africa, representing 65 per cent and 86 per cent of total FO volume and value, respectively.

Kenyan FO activity stalled in 2017 with no further offers on the NSE, potentially attributable to the tense environment that developed subsequent to elections held during the year.

During the period, Kenya was only able to raise a total of Sh31.8 billion from five offers, with two raising Sh4.6 billion in 2014, and three raising Sh27.2 billion in 2016.
But in 2016. KenGen FO was among the top 10 FOs of that year after raising Sh26.2 billion.

The report lists all new primary market equity IPOs and FOs by listed companies, in which capital was raised on Africa’s principal stock markets and market segments.