* To offer up to 81 mln shares, or 38 pct stake, in IPO
* IPO to open before end of June
* Funds will be used for new products
* Expects to start offering derivatives soon
By Duncan Miriri
NAIROBI, May 12 The Nairobi Securities Exchange
(NSE) will sell up to a 38 percent stake in an initial public
offering by the end of next month to raise funds for new
products and enhance transparency, its chief executive said.
Peter Mwangi said the owners of the Kenyan bourse, a mutual
company held by brokers, will offer up to 81 million shares of 4
shillings ($0.05) each, amounting to 38 percent of its total
capitalisation, subject to regulatory approval.
However, the actual offer price will be set by the IPO
advisers at a later date.
"We want to list through an IPO (initial public offer) on
the main market. We need to open this listing before the 30th of
June," he told Reuters.
"That conversion from a private to a public company will
position us to be a very effective player."
Sub-Saharan African capital markets have been attracting
rising investment from outside the continent as investors chase
"We are playing in a sweet spot where the frontier funds
think Africa is rising. East Africa is a hot spot on the African
map and we are the gateway into that east African region,"
Regional integration has been driving expansion among
locally listed firms and the discovery of oil and gas across
east Africa in recent years has also bolstered investor
NSE's pretax profit more than doubled to 379 million
shillings last year from 2012, lifted by a surge in trading
turnover after the country's presidential election passed off
peacefully in March.
Mwangi said part of the funds raised in the offer will be
used to bankroll new products like derivatives, exchange-traded
funds and Sharia-compliant indexes.
Plans to offer currency and interest rates futures and
options were at an advanced stage with the regulator Capital
Markets Authority perusing them for a final approval.
"We are seeing more and more international investors who
might want to invest in Kenya and they might want to hedge the
currency risk," the chief executive said.
Kenyan banks offer foreign exchange forward contracts, which
are negotiated directly with buyers, but they cannot be traded.
The NSE futures market will offer standardised contracts for
currency futures that will be traded.
Mwangi said they wanted to attract more listings on the
NSE's Growth Enterprise Market (GEMS) which is aimed at small
firms wishing to list their shares.
Only one firm, property developer Home Afrika, is
listed on GEMS and the NSE hopes it will pull in more through
easier listing terms like requiring business owners, mainly
families reluctant to lose control of their businesses, to offer
a minimum of 15 percent shares on the market.
"With 85 percent you have effective control of your company
but you enjoy all the advantages of being listed. We are in a
sense offering the best of both worlds," Mwangi said.
(1 = 87.1000 Kenyan shillings)
(Editing by James Macharia and Susan Fenton)