NSE bets on secondary listings to boost bourse activity amid IPO drought

Sunday May 19 2024
Nairobi Securities Exchange.

The trading floor at the Nairobi Securities Exchange. PHOTO | NMG


The Nairobi Securities Exchange (NSE) is betting on cross-listings to boost activity on the stockmarket, which is going through a decade-long Initial Public Offering (IPO) drought.

The self-listed exchange says in its latest annual report (2023) that it plans to offer international investors leeway to tap into the region’s vibrant economy and burgeoning sectors such as technology, finance and consumer goods through cross-listing regional companies.

The NSE has only two cross-listed firms — Umeme Ltd from the Uganda Securities Exchange (USE) and Bank of Kigali (BoK) from the Rwanda Stock Exchange (RSE).

“As Kenya continues to position itself as a regional financial hub, cross-listings on the NSE will serve as a testament to its growing significance in the global investment landscape,” said Frank Mwiti, NSE CEO.

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“Cross-listings will provide diversification benefits while fostering greater liquidity and depth in the market, ultimately enhancing NSE’s attractiveness to global investors.”


This is a strategic financial decision that allows companies to expand their investor base and enhance liquidity by listing their shares on multiple stock exchanges.

Usually, companies would want to cross-list shares to access more capital than is available on one exchange and to access a wider pool of investors.

The 70-year-old NSE has not been a beneficiary of cross-listed shares despite having several of its companies cross-listed in Uganda, Rwanda and Tanzania. And the debate on whether companies derive value from cross-listing has shown no signs of abating.

Cross-listing improves a company’s visibility and enlarges its investor base, low or no trading on these counters has left companies hesitant to issue shares in new markets. For instance, Kenya’s investment firm Centum shelved plans to cross-list on the RSE and the Dar es Salaam Stock Exchange (DSE) in 2016, citing lack of liquidity in its cross-listed shares in Uganda.

Capital markets Authority (CMA) Chief Executive Wycliffe Shamiah says trading in cross-listed shares is still a challenge in the region due to the manual operations of cross-listed trades, trading in multiple currencies, absence of a unified regulatory framework and the varying levels of development of regional stockmarkets.

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Primary markets

“You must know that for you to trade shares, someone must buy and for you to buy, someone must provide the shares. So, if you have a market which doesn’t have this stock of shares- then that market will not trade in those shares.

So this challenge is still there, and of course it would have been addressed by automation of, may be, our various registries and of course the infrastructure which allows people to buy from where they are,” Mr Shamiah said in an earlier interview.

Other challenges facing trading in cross-listed shares include exchange rate risks and the fact that these shares are usually held by shareholders domiciled in primary markets.

Rwanda’s Bank of Kigali became the second firm in the region to cross-list its shares on the NSE in 2018 after Uganda’s utility firm Umeme, which cross-listed in 2012. The NSE management is however hopeful that it is on course to breaking this cross-listing jinx to attract more secondary listings on the exchange.

“Through engagements with various international institutional investors, I will equally focus on enhancing our regional leadership. Over the course of the last few years, Kenya has made significant progress in enhancing the investment ecosystem,” Mr Mwiti says.

Across East Africa, 10 companies have cross-listed their shares in multiple stockmarkets. These are KCB Group, Nation Media Group (NMG), East African Breweries Limited (EABL), Kenya Airways (KQ), Equity Group, Centum Investments, Jubilee Holdings, Umeme Ltd, collapsed Uchumi Supermarkets and the Bank of Kigali (BoK).

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NMG, KCB, EABL, KQ and Jubilee Holdings, which are primarily listed on the NSE, are cross-listed at the USE and Dar es Salaam Stock Exchange (DSE).

The East African securities exchanges are working towards integrating the central depository systems of the region’s bourses with hopes of hastening trade in cross-listed shares and boost liquidity.

The EAC member states are working on a project to harmonise the electronic settlement systems of four stock exchanges — the NSE, the DSE, the USE and the RSE — to ensure that EAC citizens buy and sell shares listed on those exchanges from their own respective countries.

The project seeks to link the regional bourses electronically into a single market.

Burundi is yet to complete the development of its stockmarket.

“The Board is optimistic of a positive performance in the year 2024 and is keen on deploying various strategies to accelerate business recovery and performance in the year,” the NSE says.

“The recent, partial advanced settlement of Kenya’s June 2024 Eurobond in early 2024 sent a positive signal to the market. The move significantly buoyed investor sentiments and strengthened the Kenya Shilling against major currencies, thereby injecting a renewed sense of confidence and optimism into the market.”