The Capital Markets Authority (CMA) has approved the country’s debut asset-backed security (ABS) seeking to raise up to Sh47 billion from investors towards the construction of a government-owned multibillion-shilling sporting complex along Nairobi’s Ngong Road.
Sources told the Business Daily that the security, which has been arranged through a special purpose vehicle (SPV) dubbed Linzi Finco Trust, will be issued in tranches, with the proceeds expected to be invested in the construction of the Talanta Sports City.
The facility will serve as collateral for investors who will receive income at a rate that is yet to be disclosed.
“The SPV has been set up to raise this money towards the construction of a sporting complex. This is the first ABS to be approved by CMA under the existing legal framework,” the source said, adding that the announcement on the approval of the security will be made public any time.
When contacted for comments CMA’s chief executive Wycliffe Shamiah confirmed that an approval has indeed been issued for the ABS and that an SPV has been set for the proposed fund raising.
“For an ABS we always have an SPV so the same SPV (Linzi) that did the Sukuk bond last year is still the one being used and I think they have done very well,” Mr Shamiah said.
“We are happy that at least the first ABS has been approved. They will raise up to Sh47 billion in tranches. It is not a one take issue. They will not raise the entire Sh47 billion at once. They will do it in tranches.”
Last year 2024 Linzi Finco Trust issued the first Shariah compliant Sukuk bond raising Sh3 billion with a repayment period of 15 years, with the funds used in the construction of affordable houses for the military.
Asset-backed securities is a type of financial investment that is collateralised (backed) by an underlying group of assets—usually ones that generate a cash flow from debt, such as loans, leases, credit card balances, or receivables.
It takes the form of a bond or note, paying income at a fixed rate for a set amount of time, until maturity.
ABSs are created when a company sells its loans or other debts to an issuer, a financial institution that then packages them into a portfolio to sell to investors.
The rollout of ABS in Kenya is expected to support investment in capital intensive infrastructure projects as well as provide for the repackaging of future cash flows to raise capital.
CMA issued initial regulations for ABSs in the year 2007.
But the amendment provisions to the CMA Act in 2013 proved to be inconsistent with the ABS regulations, forcing the regulator to address the lapse in the legal framework through a Policy Guidance Note (PGN) in 2017 that clarified and offered guidance for asset backed securitisation.
The construction of the 60,000-seater Talanta Sports City Stadium began on March 1 last year (2024) and is expected to be completed in February next year (2026) but members of parliament (MPs) have raised concerns over the payment schedule for the various sports infrastructure projects undertaken jointly by the Ministries of Sports and Defence.
In April, the Parliament heard that despite 37 percent of the work done on the Talanta Sports City Stadium whose cost is estimated at $344.5 million (Sh44.5 billion), the government had only paid five percent of the total construction costs and that a similar trend has been observed on all other stadium projects where it emerged that the amount paid so far were significantly lower than the value of work already done.
An artistic impression of the Talanta Hela Stadium that will be constructed at Jamhuri ground along Ngong Road, in Nairobi.
Photo credit: Pool
This was revealed through a document presented before the National Assembly’s Committee on Sports and Culture by the Ministry of Defence led by Cabinet Secretary Soipan Tuya.
President William Ruto expressed satisfaction with the progress in the construction of the world-class Nairobi’s Talanta Sports City that is expected to significantly elevate the country’s sports profile.
