NSE bets on incubator graduates to sprout new listings

The Nairobi Securities Exchange (NSE) has tipped its incubator program to build the exchange’s first listings ending a three-year barren run.

NSE Chief Executive Officer Geoffrey Odundo says the program now boasts of two imminent listings on any of the exchange’s trading platforms.

“The program has taken off well, early cohorts are just about ready,” he said.

“This is how companies are going to come to market as the incubator serves the opportunity to strengthen key areas before listing.”

Dubbed Ibuka, the companies’ incubator has been hosting aspiring issuers since December 2018 and currently has 22 hosted firms including APT Commodities Limited, Mookh Africa and Safaricom Investment Cooperative.

The platform walks firms through the listings journey while providing non-issuer advantages including high level visibility across a vast public spectrum and assistance in inculcating improved corporatization.

The shortlist of 22 further contains two of 2019’s tipped initial public offers (IPOs) in the Vehicle and Equipment Leasing Limited (VAELL) and Tusker Mattresses Limited (Tuskys).

While the NSE did not confirm the identity of the future issuers, retailer Tuskys has been out to tap a strategic investor to anchor its potential equity listing on the exchange.

Nevertheless, potential equity issues in the short-run face hiccups from the stay of depressive market conditions as share valuations take a beating from investor profit taking activity.

In the week to February 14, the equities market remained on a downward trajectory as all the three benchmarking indices shed off points bringing year to date losses to 2.4, 2 and 2.3 per cent for the NASI, NSE 20 and NSE 25 respectively.

Price corrections in the week were led by large capped stocks including Bamburi, Safaricom, Diamond Trust Bank (DTB) and Equity Group which shed valuations by 6.9, 5.8, 5.5 and 3.9 per cent respectively

The market’s price to earnings ratio (P/E) meanwhile closed the week at 11.2x keeping off the 13.2x historical average.

The market undervaluation has driven decisions by firms such as Cytonn Investment to keep off the markets in favour of alternative financing avenues as the companies remain wary stricken valuation risks.

The NSE has been without a listing on any of its segments since Barclay’s listing of its gold exchange traded fund (ETF) in 2017 and its self-listing in 2014.