Category Archives: NSE IPO

Stanlib Fahari REIT IPO Results

This week,  Stanlib released the results of the Fahari REIT IPO offer that was launched in October.

They had aimed to raise between Kshs 2.6 billion and Kshs, 12.5 billion, but Kenya’s first REIT grossed Kshs 3.6 billion (29% uptake) – after expenses of Kshs 174 million,  and netted Kshs 3.44 billion.

East Africa institutions (QII) applied for and received 105 million units worth Kshs 2.1 billion (58%), foreign investors applied for and got 45 million units worth Kshs 899 million (25%), and East African retail investors applied for and received 30.8 million units worth Kshs 617 million (17%).

The allocation policy in the event of an over-subscription was to be for 55% for QII, retail would get 25%, and foreign investors 20%. But it’s not clear if the Kshs 1.5 billion ($15M investment by the IFC) committed has been factored in, or if it will come later.

The low uptake would be considered disappointing but for a few factors. First REIT’s are a new exotic product at the Nairobi Securities Exchange (who are also planning to roll out derivatives) and REIT returns are not widely understood by investors. Second, this is a time of high interest rates for competing government securities that are still wildly oversubscribed, and third is that investors may still have overhang from the Imperial Bank shut down – which may continue to affect subsequent attempts to raise cash from the public – such as from company rights issues or commercial bank bonds.

Stanlib are expected to use the funds to complete the purchase of a Nairobi mall

EDIT: The IFC ended up investing $6.7 million (Sh684 million) to match the other investors, which is less than half the $15 million (Sh1.53 billion) it was proposing to invest in Stanlib Investment Fahari Income-Reit. (Via Business Daily

Lessons for Kenya from a Japan Postal IPO

The Kenya government just announced a $600 million 2 year syndicated loan that will have  Citi, Standard Bank and Standard Chartered Bank as bookrunners and lead arrangers.

But as there’s concern of the ballooning government debt levels, is it time to turn to other sources of funding? Some have suggested the government sell off shares in companies it has such as Safaricom.

An example comes from Japan where their government is about to have what’s expected to be the largest IPO of 2015. According to this WSJ article;

  • In addition to running 24,000 post office branches, parent company Japan Post Holdings operates Japan Post Insurance, the country’s largest insurer–and Japan Post Bank–one of the world’s biggest banks by deposits, with $1.67 trillion.
  • The Japanese government is raising nearly $12 billion from the sale of 11% of three entities – its postal, banking and insurance units.
  • Most of the money raised from the sales will be used to help finance recovery efforts after the 2011 earthquake and tsunami.
  • 80% of the shares in Japan Post Holdings will go to domestic investors, while the remaining 20% are earmarked for international investors.

Shares Portfolio August 2014

The Stable


Bralirwa (Rwanda) ↑

Diamond Trust Bank ↑

ICDCI (Centum) ↑

Kenya Airways ↓

Kenya Commercial Bank (KCB) ↑

Kenya Oil Company (Kenol) ↓

Safaricom ↓

Scangroup ↓

Stanbic (Uganda) ↓

Unga ↑


  • Comparing the basket to one year ago, the portfolio, excluding new shares, is up 22% since May 2014 while the Nairobi Shares Exchange main index is up 5% over the same period.
  • Best Performer: Centum (up 36% in 3 months), KCB 23%
  • Worst Performer: Kenya Airways (down 15% in 3 months), Kenol -8%
  • In: NSE
  • Out: Barclays, Equity, Portland Cement
  • Increase: Diamond Trust, Centum, Kenya Airways
  • Decrease: None
  • Unexpected gains/losses:  Centum’s endless deal making.

Nairobi Securities Exchange IPO

The Nairobi Securities Exchange (NSE) launched its IPO on July 23. It runs up to August 12, 2014 and they are selling 66 million shares at Kshs 9.50 per share (with a minimum investment of 500 shares costing Kshs 4,750) and the NSE plans to raise Kshs. 627 million (~$7.3 million).

Excerpts from the prospectus and other sources. 

  • The NSE borrowed Kshs 300 million from Kenya Commercial Bank to part finance the purchase of the Westlands building that now houses the exchange. (The interest rate is minus 2 the bank’s base rate). Part of the funds raised from the IPO will be used to repay the Exchange’s mortgage debt.
  • The Dar es Salaam Securities Exchange has completely divested from the NSE and CDSC.
  • The NSE has about Kshs 1 billion assets and an EPS of 10.70. They had earnings of 622 million and a profit of Kshs 262 million in 2013. The NSE owns Kshs 20 million worth of  Safaricom bonds and Kshs 15 million of Housing Finance ones
  • The IPO is budgeted to cost Kshs 40.8M
  • Ahead of the IPO in which 194 million (M) shares are being listed, the Kenya Government and the Investor Compensation Fund each own 6.56 million shares and 22 stockbrokers each own 4.08M shares – for a total of 128.6M shares. 2.5 million shares are reserved for employees of the exchange (The NSE  has 38 employees and 5 senior managers). 
  • KRA assessed and charged them Kshs 19m for 4 years of back taxes, of which Kshs 15m has been paid
  • One of the options the Exchange is contemplating is to establish regional exchanges in Somalia, the Democratic Republic of Congo (DRC), South Sudan and Burundi 
  • The NSE expects to introduce the REITs and ETFs, and there are also plans to introduce the a Derivatives Market this year. The NSE also plans to upgrade of the Automated Trading System (ATS) and the Bonds Trade Reporting System with some of the proceeds from the IPO.

Hilton, Intercontinental, KWAL Privatizations

Privatizations to be concluded by the Kenya Government by June 2013 include: 

  • The Industrial & Development Corporation (ICDC) will sell 26% of Kenya Wine Agencies Limited (KWAL) to Distell of South Africa and 4% to employees.
  • The Kenya Tourist Development Corporation (KTDC) will sell 40% of the 287-room Hilton Hotel, 34% of 389-room Intercontinental Hotel (both in Nairobi) and 39% of Mountain Lodge which is located in Nyeri and managed by TPS Serena, to fellow shareholders.
No IPO’s will result, but the remaining shares in KWAL may be sold to the public within two to four years if their performance improves.