East African stockmarkets executives are confident about the forthcoming share sale of state-owned Kenya Pipeline Company (KPC) on the Nairobi Securities Exchange (NSE) after the government announced it would be selling its 65 percent controlling stake to the public in September.

 

Kenya targets $775.19 million in the largest IPO in 17 years, after the Safaricom listing in 2008.

The drive has, however, suffered a setback after a Nairobi court temporarily suspended it pending determination of an application filed by the Consumer Federation of Kenya (Cofek) on allegations that due process for the sale of the public asset has not been followed.

The hearing of the application has been set for September 5, effectively delaying the planned multi-million dollar transaction.

Nevertheless, the managements of regional stockmarkets view the transaction as an exceptional opportunity to boost liquidity in the markets, create new products, promote cross-listings and attract the elusive small and retail investors to shore up equity transactions and enhance price discovery through market speculations.

“We are really looking forward for an equity addition in our market for liquidity purposes and inclusivity in the markets. People are looking and waiting for this IPO. We still have very few companies which are liquid in the market,” Celestin Rwabukumba, Rwanda Stock Exchange CEO told The EastAfrican on Tuesday.“As Easea, it is part of our agenda for state-owned enterprises to be privatised through the stockmarkets. This is an agenda that we are pushing at the regional level and even at the continental level to bring public utilities to the market because it is key to financial inclusion, savings and wealth creation,” said Rwabukumba, a former chairperson of the East African Securities Exchanges Association (Easea).

Easea comprises Kenya, Uganda, Tanzania, Rwanda, Ethiopia and Somalia, exchanges keen on integrating into a single stockmarket for investors to benefit from reduced time and cost of trading in company shares while issuers profit from expanded and diversified pool of investors and opportunities to cross-list.

KPC is a strategic state corporation and of regional significance, serving as the backbone for petroleum transportation and storage in Kenya and neighbouring countries.“This IPO will benefit mostly the regional markets in terms of increased liquidity in the markets, new products and cross-listings. It would be good news for the market again for the region and NSE especially after a long wait (for IPOs),” Mr Rwabukumba said.

Kenya’s last high-stakes IPO was Safaricom, which sold 25 percent (10 billion shares) to the public in 2008 at an offer price of $0.03 per share, raising $387.59 million. It brought more than a million new investors into the equity market.

“Regionally, the KPC IPO could act as a catalyst for long-delayed listings across East African exchanges, particularly in countries that are actively seeking to revitalise their stockmarkets. It reinforces the idea that well-executed privatisation programmes, anchored on transparency, strong institutions, and investor engagement can unlock capital and accelerate economic development,” said NSE chief executive Frank Mwiti.“In many ways, this transaction provides a blueprint for ‘new age’ privatisation, where public interest entities are restructured to attract long-term investment, enhance public trust, and support sustainable development. We saw similar momentum during Kenya’s privatisation wave in the early 2000s, and the current environment, with strong investor appetite and advancing regulatory frameworks is ideal for a revival.”Daniel ole Sumayan, chairman of the Dar es Salaam Stock Exchange (DSE) Plc, said capital markets are helping to build resilient and efficient state-owned enterprises by facilitating access to capital and promoting good governance.

Mr Mwiti said KPC will help unlock a new asset on the exchange, “giving investors exposure to long-term, utility-like revenue streams and the potential for capital appreciation.”“This transaction could serve as a much-needed catalyst for renewed activity and crucially it has the potential to set a powerful precedent for cross-listings and increased regional investor participation,” says Mwiti.

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