Packaging solutions provider, Shri Krishana Overseas Ltd (Skol), has applied for listing on the Growth Enterprise Market Segment (Gems) of the Nairobi Securities Exchange (NSE), official documents revealed.
Gems is a segment for small and medium-sized companies that enables them to raise capital and accelerate their growth within a regulatory environment. The segment offers companies flexible listing requirements in recognition of the company’s growth phase.
Fillings show that Nairobi-based Skol targets to enter the market via listing by introduction but subject to approval by the Capital Markets Authority (CMA).
Listing by introduction happens when a company takes its existing shares and lists them on an exchange to raise capital at a later date when required.
The planned listing by Skol is earmarked for August this year in an arrangement where Synesis Capital is the lead transaction advisor while MWC Legal is serving as the legal advisor.
Aside from the constraint of not being able to raise capital, listing by introduction is often perceived to have the advantage of providing a company with a much broader base of shareholders, improved liquidity as well as enhanced profiling given the visibility provided by the exchange. Companies that go to market via introduction are, however, able to raise capital further down the road.
Other entities that went to market via introduction include Homeboyz Entertainment, which listed 63.2 million shares in December 2020 and Flame Tree Group which listed in November 2014.
The application by Skol comes at a time when the government has been at pains to end the listings drought at the NSE.
Kenya’s last initial public offering (IPO) was in 2015 when property investment fund ILAM Fahari I-Reit was listed on the NSE after raising Sh3.6 billion.
The CMA recently published revised rules that would allow more companies to list on the bourse to encourage additional IPOs and reverse a six-year drought in transactions.
As part of the radical changes, the regulator has struck out an earlier rule that restricted IPO listings to public companies limited by shares and registered under the Companies Act. A public company limited by shares is a legal entity that is separate and distinct from its members and directors or management.
The regulator also relaxed a rule on the profitability of firms seeking to go public in the main investment market segment. Currently, the law provides that an issuer must have declared profits after tax attributable to shareholders in at least three of the last five completed accounting periods to the date of the offer.
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