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The Delisting Trends at Nairobi Securities Exchange

Here is a list of companies you probably have never heard of! Yet were once listed on Nairobi Stock Exchange.  A number of listed companies have made their exit from the Nairobi Securities Exchange (NSE) citing various reasons over time. Currently the NSE lists 57 companies yet in 1970’s the number was 72. Though there have been some new Listings, many have also gone and this is very normal globally. There is very scanty information on these companies some of which we’ve never heard of in the modern Kenya! No body mentions them!

Delisting means permanent removal of securities of a listed company from a stock exchange. After the delisting, the securities of that company can no longer be traded on that stock exchange. Firms delist for different reasons, while for some their performance fell below the listing requirements, others were bought over leading to their exits. Most firms cites compliance costs and supervisory issues while others voluntarily exit. The collapse of initial EAC block also meant delisting of companies listed in the Nairobi Stock Exchange originating from Uganda and Tanzania.  The Bourse has made progress in attracting new listings, recently through the introduction of Growth Enterprises Market Segments (GEMs) only Home Afrika and I&M bank listed in 2013 through GEMs and Reverse takeover respectively.

Among the most recent exits are:

  • CMC Holdings
  • AccessKenya
  • Rea Vipingo

Unilever Kenya Ltd formally Brooke Bond Liebig Kenya Ltd exited from the bourse in January 2009, after its shareholders passed a special resolution to delist, after Unilever Plc through its subsidiary Brooke Bond Group acquired 11.8 per cent shares held by minority shareholders in the tea company. Other exits which include paper sack and carton maker East African Packaging Ltd, and British trading firm African Lakes Corporation which delisted from the bourse in 2003. African Tours and Hotels Ltd put under receivership in 1998 thereafter rebranding to Kenya Safari Lodges.

Some Of The Earlier Exits Include But Not Limited To:

  • Elliot’s Bakery Ltd.
  • TimSales
  • Kenya Hotels Ltd.
  • Brooke bond Kenya Ltd.
  • East African Packaging Ltd
  • African Lakes Corporation.
  • Consolidated Holdings Ltd.
  • E. A. Bag & Cordage Co.Ltd.
  • E. A. Packaging Industries Ltd.
  • E. A. Road Services Ltd.
  • Motor Mart Group Ltd.
  • Kenya National Mills Ltd.
  • Ol Pajeta Ranching Ltd.
  • Pearl Dry cleaners Ltd.
  • Philips Harrison & Crossifield.
  • Sofar Investment Ltd.
  • Theta Group Ltd.
  • Kenya Finance Corporation.
  • Chancery Investment Ltd.
  • Kenstock Ltd.
  • Kenya Co-operative Cremaries.
  • Kenya Planters Co-operative.
  • E. A. Oxygent Ltd.
  • City Brewery Investments Ltd

A few of the companies rebranded. Credit Finance Corporation was renamed CFC bank in 1995 when it became a bank Whilst Dunlop Kenya Ltd changed its name to Olympia Capital Holdings Ltd. The market has evolved over years shading off old listings while bringing on board more robust modern day companies on board for example Kengen, Kenya Re, Equity bank and Safaricom being just a few of the recent listings.

The question is Why are these companies Delisting? Is the market becoming less attractive as a source of Longterm financing?

 
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Posted by on May 12, 2014 in Economical, Financial

 

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Kenya’s Real Estate Investment Trusts(REITs)

A REIT is a security that sells like a stock on the stock exchange and invests in real estate directly, either through properties or mortgages

Introduction of Real Estate Investment Trusts by Kenya’s Capital Markets Authority is intended to open up space for even the smallest of Kenyan investors, for whom the only alternative investments have been stocks, bonds or insurance. Reits – which are securities that sell like shares on stock exchanges and invest in real estate directly – typically offer investors high yields, and highly liquid ways and means of investing in real estate.

REITs are typically exempt from corporate tax as long as 90% of net income is distributed to shareholders. REITs are commonly structured as closed ended trusts due to the illiquid nature of property.  Individuals can invest in Reits by buying shares directly on an open exchange or by investing in a mutual fund that specializes in real estate. An additional benefit of Reits is that they may allow dividend reinvestment plans (DRIPS). They have tax advantages too.

Kenya’s capital markets can play a strong role in the further development of the real estate sector. The introduction of REITs is viable given the demand for real estate, and the need for additional financial instruments.

The capital markets can help mobilize and allocate resources, as there is a strong demand and cultural bias among Kenyans towards property investments, among the Kenya’s’ middle class investment in real estate is deemed the ultimate Goal!, a break through,

Retirement Benefit Schemes as well as many individuals are already investing in property but many are very limited in their ability to do so in that they cannot afford direct investments that are not liquid.

With the introduction of REITs the property developers would come to the capital markets to raise funds. It is also likely that through a higher level of participation through the capital markets, bank financing would be forced to become more competitive thus helping to further reduce development costs.

• REITS enable you to diversify your portfolio into real estate.

• REITS offer strong prospects of capital gains and high dividend income. Real estate prices have more than tripled in Kenya between 2000- 2010, outperforming some asset classes like equities and government bonds.

• The predicted economic growth in Kenya is looking to lift property prices higher, and with the demand for housing in the middle and lower end of the property market considerably high, REITs are expected to perform quite well.

 
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Posted by on June 3, 2013 in Uncategorized

 
 
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