NSE buys Sh112m stake in shares clearing company

NSE chairman Samuel Kimani during a November 2019 event in Nairobi. PHOTO | DIANA NGILA | NMG 

By PATRICK ALUSHULA
More by this Author

Summary

• Nairobi Securities Exchange (NSE) Limited has nearly doubled its stake in Central Depository & Settlement Corporation Limited to 40.5 percent with two deals valued at Sh111.9 million.
• NSE company disclosed in latest annual report that its indirect stake in Central Depository & Settlement Corporation (CDSC), a firm which provides automated clearing, delivery and settlement of shares, has risen from 22.5 percent held in the previous year.
• The new stake came after NSE bought 88.8 percent in Association of Kenya Stockbrokers (AKS) Nominees Limited. AKS holds 18 percent stake in CDSC.

Nairobi Securities Exchange (NSE) Limited has nearly doubled its stake in Central Depository & Settlement Corporation Limited to 40.5 percent with two deals valued at Sh111.9 million.

NSE company disclosed in latest annual report that its indirect stake in Central Depository & Settlement Corporation (CDSC), a firm which provides automated clearing, delivery and settlement of shares, has risen from 22.5 percent held in the previous year.

The new stake came after NSE bought 88.8 percent in Association of Kenya Stockbrokers (AKS) Nominees Limited. AKS holds 18 percent stake in CDSC.

The transaction was carried out in two tranches. The first was late last year in which NSE bought a 61 percent stake at Sh77 million.

NSE then followed this up with a second purchase of an additional 1,381 shares or 27.8 percent of AKS at a cost of Sh34.9 million in the first quarter of 2020. This was disclosed as a post balance sheet item.

NSE chairman Samuel Kimani said the deal had seen NSE’s indirect shareholding in CSDC rise to 40.5 percent. This closes the gap between NSE stake in CSDC and that of top shareholder The Capital Markets Challenge Fund Limited (50 percent).

“This acquisition is for synergistic purposes and is aimed at strengthening our trading ecosystem. This strategic acquisition complements our other investments in the Dar-es-Salam Stock Exchange in line with our objective of investing in related businesses,” said Mr Kimani.

The principal activity of AKS is holding equity shares in CDSC in trust for its members who are authorised to operate as stockbrokers and investment banks at the Nairobi bourse.

NSE Limited also holds 100 percent stake in NSE Clear Limited, a company formed to act as a central counterparty in all the derivative transactions and AKS Nominees Ltd.

The transaction comes on the back of NSE Limited performance which was impacted by falling equity turnover in the year ended December 2019.

NSE net profit last year declined by 58 percent to Sh80 million from Sh191 million recorded over the same period in 2018.

This was occasioned by a nine percent decrease in revenues, mainly driven by a 12 percent drop in equity turnover.

During the period, the firm also incurred a one off restructuring cost of Sh52 million, aimed at lowering its cost to income ratio.