Kenya's stock exchange launches incubator scheme for start-up firms

NAIROBI, April 15 (Reuters) - Kenya’s Nairobi Securities Exchange has set up an incubator programme to prepare young companies for an eventual listing or bond issuance on the bourse, its chief executive said, in a bid to boost the number of firms it lists.

The exchange - a key entry point for foreign investors seeking exposure to East Africa’s fast-growing economies, and the continent’s fifth biggest overall - has seen the number of companies it lists hold at about 65 for many years.

Known as Ibuka, Swahili for Emerge, the new scheme is targeting start-up firms in fields such as financial technology and entertainment, with a view to preparing them for listing in two to three years, Geoffrey Odundo told Reuters.

“As opposed to waiting for companies to come to market when they are ready, we want to make them ready,” he said on the trading floor of the market.

“It is a platform that doesn’t have very restrictive entry requirements - we don’t even look for your financials, all we want to know is you are keeping financials.”

In partnership with other organisations, the NSE offers the companies training in issues like corporate governance, and also helps them widen their networks.

“A company that will go through incubation, acceleration and listing, will be a much stronger company than a company that just comes straight into a listing,” said Odundo.

Six firms have been admitted since launch last December, including APT Commodities, which trades tea in the coastal city of Mombasa, My Space Properties and Blue Nile Rolling Mills, a steel company.

The NSE handles average trading volumes of $8-10 million on normal days, but trading is dominated by shares of a few big firms like telecoms operator Safaricom.

Its last major deal was a listing of shares in Rwanda’s Bank of Kigali on the main trading segment last year.

At least three other private companies were likely to list their shares on the main market segment later this year, Odundo said, adding they were also discussing an initial public offering for the government’s National Oil Corporation.

The government plans to raise $1 billion by listing National Oil this year, and to use it as a vehicle to hold its 25 percent interest in oil fields discovered in the north by Tullow Oil and its partners in 2012.

The NSE has already diversified into mobile phone-based government bonds, called M-Akiba, launched in 2017 in a world first. The second tranche of the issue got a 79 percent subscription and raised nearly 200 million shillings ($1.98 million) earlier this year.

The first tranche in 2017 had been only 25 percent subscribed.

“Momentum is building now. There is a lot of interest. We are looking at another offer coming in May,” Odundo said, without giving more details. ($1 = 100.9000 Kenyan shillings) (Editing by Jan Harvey)