Category Archives: Nairobi Stock Exchange

Nairobi hosts the 7th BAFM – Building African Financial Markets seminar

This week sees Nairobi host the 7th Building African Financial Markets (BAFM) seminar with the theme of “adaptive innovation as a lever for growth and sustainable development of financial markets”. 

News of the seminar was unveiled by Nairobi Securities Exchange (NSE) CEO, Geoffrey Odundo in January 2018 when Barclays launched its Africa Financial Markets Index (AFMI) report in Nairobi. The Barclays AFMI measured African stock exchanges by six pillars of market depth, access to foreign exchange, market transparency, macro-opportunity, enforceability of agreements and capacity of local investors, and it ranked South Africa on top, with Kenya in fifth place.

The NSE and the African Securities Exchanges Association are organizers of the BAFM event with  Bloomberg and Barclays as gold sponsors. The ASEA, which was founded in 1993 with the Nairobi Stock Exchange as the first member, now has a membership of 40 African stock exchanges.

The BAFM will be officially opened by William Ruto, the Deputy President of the Republic of Kenya. It will feature leaders and speakers from organizations such as Nasdaq, the Johannesburg Stock Exchange, EFG-Hermes – a Cairo-based investment bank that is new to Nairobi, and Safaricom, while some of the sessions of great interest are likely to include “a blueprint for orderly markets in Africa”, M-Akiba; the $30 mobile-phone government bond as a disruptive technology reshaping African financial markets, “building new markets in frontier economies”, a guide for managing cyber risk, linking African exchanges organically, and “is blockchain the future of finance or a flash in the pan?”.

Reading the Tea Leaves at Kurwitu Ventures

Kurwitu Ventures published their 2017 accounts last month. The company listed on the Growth Enterprises Market Segment (GEMS) of the Nairobi Securities Exchange (NSE) back in November 2014 at a premium price of Kshs 1,250 per share. The GEMS segment was created was created to give small and medium enterprises an easier route to the capital markets through lower requirements such as being in operation and audited accounts for just a year and took take steps to improve their governance

Their 2017 report notes that Kurwitu offers Shariah-compliant investments and asset management services – including Sukuk securities (Islamic bonds) – and their key focus remains on agriculture investments. The company may also invest with others persons in pass-through ventures such as REIT’s and investment notes – and such products may not appear on the group balance sheet.

In their original listing document (PDF), the company had forecast to generate revenue through three sources; from early-stage equity investments (generated by investing Kshs 100M in in projects in 2015, up to Kshs 200M in 2017), doing three (3) pass through investments a year of about Kshs 400 M in value – out of which they would earn a 1.5% fee and finally, corporate financial advisory deals for which they would earn a minimum of Kshs 4 M per deal. But in 2017, the company lost Kshs 10 million (10 M) compared to a loss of Kshs 14 M the year before. They had revenue of Kshs 317 shillings (all interest income, and still an amazingly low amount of interest income in relation to their bank balances) while they had revenue of Kshs 20,885 in 2016.

Directors at the time of listing were Abdikadir Hussein Mohamed, Mohamed Abdirahman Hassan, Sumayya Hassan Athmani, Jamal Isaak Ibrahim, Abdikadir Mohammed Haji, and Abdirahman Abdillahi and shareholders were Abdirahman Abdillahi (51%), Mohammed A. Hassan (27%), Ali Daud Mohamed (4%), Noordin M Haji (4%) and Anas Ibrahim Hussein (4%).  Abdirahman Abdillahi and Mohammed Hassan have since reduced their stakes in Kurwitu. To date, shareholders have lent Kshs 70 million to Kurwitu (including 20M in 2017) and these loans, which have no repayment date or interest charged, can be converted to shares at a value of Kshs 1,400 per share – and the current outstanding loans are equivalent to 50,000 shares against the current 102,000 issues shares. The company is authorized to have 125,000 shares.

The company created an asset management subsidiary in March 2015 that is 99.9% owned by Kurwitu Ventures and 0.01% by Abdirahman Abdillahi (the managing director). It has 3 plots of land in Lamu – Magongoni that it bought for 102 million and which it has owned since its listing, while in 2015 they bought another parcel in Lamu – Lake Kenyatta for Kshs 4 million.

In 2017, the company had Kshs 6 million (6M) in the bank, paid 5 M in salaries and another 3M in professional fees. Their accounts were audited by Abdulhamid & company. This accumulated losses at the end of  2017 were Kshs  44 million, compared to Kshs 33 M the previous year.

Other companies on the GEMS segment of the NSE include Home Afrika, Flame Tree, and Nairobi Business Ventures. Cytonn Investments, which was granted a fund manager license last month, also plans to list under GEMS later this year, while Atlas has already exited.

Using the AMIB50 ETF to track Africa Investments

A new fund offers South African investors a chance to invest in 50 large, non-South African companies that are listed on other exchanges and in other countries across Africa. The AMI Big50 ex-SA AMIB50  ETF (exchange traded fund) was launched at the Johannesburg Stock Exchange on April 20.

The ETF is promoted by investment firm – Cloud Atlas Investing and targets institutional and retail investors, offering them a way to invest away from the Rand and South Africa. The current basket of the fund is composed of Itissalat Al Maghrib (Maroc Telecom) (20.6% of the fund), Coml.Intl.Bank (Egypt) (11%), Lafargeholcim Maroc, Guaranty Trust Bank, Safaricom (4.3%), Nigerian Breweries, Tanzania Breweries, Mcb Group Ltd, Attijariwafa Bank and Delta.

In terms of countries, exposure to Morocco 28.4%, Egypt 19.3%, Nigeria 13.7% and Kenya 11%, and for sectors, the spread is banking shares 29.3%, telecom firms 27.8%, food & beverage 17.7%, and industrial ones 14.6%.

Investors need to have a brokerage or custody account in South Africa to buy the AMIB50 and the fund management fee is a total of 1.17% per year.

Nairobi Stockbrokers Take a Bath

Last week saw the release of financial results of SBG Securities (formerly CFC Stanbic Financial Services/CSFS). They are the first stockbroker (they are actually licensed as an Investment Bank) to release their 2016 results and this was done along with the release of the results of Stanbic Bank and their common parent – Stanbic Holdings.

At SBG Securities, revenue dropped from Kshs 599 to Kshs 294 million. This was mainly due to stockbrokerage commissions which reduced from Kshs 399 to Kshs 223 million. Expenses were largely unchanged except for salaries that went down from Kshs 183 to 142 million.

SBG’s pre-tax profit for the year was Kshs 3 million, which was substantially down from Kshs 277 million in 2015. Their balance sheet also reduced down from Kshs 1 billion to 648 million. SBG is the number 3 stockbroker in Kenya with 13.8% share, and in
2015, SBG was second in brokerage commission behind Kestrel Capital.

In a notice sent to clients, they reported that turnover at the Nairobi Securities Exchange for the year was Kshs 294 billion compared to Kshs 419 billion in 2015. Also, that market weakness is expected to continue in 2017. But they added:

A new year always starts on a high with each of us drafting our investment/ financial resolutions. As the year progresses, so do our plans and at times they don’t necessarily materialize. 2017 can be the year that you fulfill your investment resolutions by investing in shares listed on the Nairobi Securities Exchange. Whilst the market has hit an 8-year low, we believe this is the time to invest.

Snooze and Lose Your Investments: Part II

Centum Investments, which recently announced a record profit, and the end of a seven-year deliberate dividend drought, has been running ads in the newspapers and online, asking shareholders to register their names & details via SMS to ensure that they get their payments on time.

At the same time, Centum has also published a list (PDF), on its website, of shareholders who have not claimed their dividends. The list has about 9,000 names, and that’s a shocking stat, considering that Centum  has about 37,000 shareholders.

No shareholder likes to lose out on a dividend or an investment. And regular shareholders who attend AGM’s have also been aware about resolutions at companies to comply with a legal requirement to  surrender unclaimed assets, including dividends, to the government.

Almost all large public companies, except those which listed recently, list & highlight their liability from unclaimed dividends (owed to shareholders) for many years in their annual reports. But if 25% of Centum shareholders, have not claimed their dividends, totaling Kshs 78 million after almost 8 years, it raises many questions about why this situation exists. But one reason could be that shareholders have been unable to receive their dividends because some companies and their registrars have made it very difficult for shareholders to prove, claim and receive their rightful dividends. lost shareholders

  • $1 = Kshs 100
  •  A  registrar is an institution,  responsible for keeping records of shareholders..and  when an issuer needs to make dividend payment to shareholders, the firm refers to the list of registered owners maintained by the registrar.
  • Centum ads say the registration is free, but normal SMS costs seem to apply.