Kenyan Bourse Eyes Incubator for Record Listings This Year

An embroidered NSE logo sits on the red jacket of an employee inside the Nairobi Securities Exchange Ltd. (NSE), in Nairobi, Kenya, on Tuesday, Dec. 8, 2015. The government had planned to plug the 2016-17 fiscal deficit with about 240 billion shillings of external borrowing, and about the same amount raised on the domestic debt market. Photographer: Bloomberg/Bloomberg
An embroidered NSE logo sits on the red jacket of an employee inside the Nairobi Securities Exchange Ltd. (NSE), in Nairobi, Kenya, on Tuesday, Dec. 8, 2015. The government had planned to plug the 2016-17 fiscal deficit with about 240 billion shillings of external borrowing, and about the same amount raised on the domestic debt market. Photographer: Bloomberg/Bloomberg

(Bloomberg) --

The Nairobi Securities Exchange plans to expand the Kenyan market with four publicly traded companies and as many corporate bonds in 2021, in what could be its best year yet of new listings.

The new equities listings will come from Ibuka, the bourse’s incubator program, NSE Chief Executive Officer Geoffrey Odundo said Wednesday in an interview. From among the 26 companies on Ibuka, two will be listed on NSE’s Main Investment Market Segment and another two on the Growth Enterprise Market Segment, Odundo said, without providing further details.

The NSE is looking to ramp up activity, partly by increasing shares available for trade. The exchange is in talks with the National Treasury to sell additional stakes in listed state-owned companies, with a view to raising as much as 300 billion shillings ($2.7 billion).

“This year we will be more aggressive, more focused on getting them on board,” Odundo said. The NSE has a “good proposition” for small businesses to raise capital through bonds and equity sales in the post-coronavirus period, he said.

More recent deals saw Homeboyz Entertainment Ltd. complete a listing by introduction in December and Stanlib Fahari I-REIT, an initial public offering in 2015. The outstanding amount of corporate bonds was 21.9 billion shillings as at Sept. 31, compared with 49.2 billion shillings a year earlier, according to the industry regulator.

Another four companies will be admitted to NSE’s Unquoted Securities Platform, which is modeled after a similar arrangement on Nasdaq Inc. and is scheduled to open February. The bourse is seeking Exchange Traded Fund providers to grow that market -- a gold ETF was the exchange’s best-performing asset class last year, with the price of a unit surging 62% to 2,100 shillings, Odundo said.

The exchange intends to begin day-trading within the first quarter of this year, a plan that is expected to raise the turnover ratio to at least 15% from 7.9%. Day-trading will be complemented by securities lending and borrowing, which is expected to release more shares held by locals for trading, Odundo said. Currently about 75% of shares are held by domestic investors, while most of the trades are in the 25% in the hands of non-residents, he said.

“If we can unlock another 25% from investors like pension schemes and push that total liquid float to 50%, won’t you see us doubling the turnover?” Odundo said. “We have engaged with the regulator and the Central Depository and Settlement Corp., and come up with a model that will be able to make day-trading achievable.”

(Adds plans on boosting trading volume in final two paragraphs.)