Kenya's stock exchange launches incubator scheme for start-up firms

Kenya’s Nairobi Securities Exchange (NSE) has set up an incubator programme to prepare young companies for an eventual listing or bond issuance on the bourse, its chief executive said, in a bid to boost the number of firms it lists.

The exchange – a key entry point for foreign investors seeking exposure to East Africa’s fast-growing economies, and the continent’s fifth biggest overall has seen the number of companies it lists hold at about 65 for many years.

Known as Ibuka, Swahili for Emerge, the new scheme is targeting start-up firms in fields such as financial technology and entertainment.

“As opposed to waiting for companies to come to the market when they are ready, we want to make them ready. So the three stages of Ibuka, is one we want to get them ready which is the incubator. We then prepare them and get them fit, which is the accelerator, and then we take them to the third stage which is where we want them to get value. Which is where now they are able to access different products in the market,” said NSE CEO, Geoffrey Odundo.

In partnership with other organisations, the NSE offers the companies training in issues like corporate governance, and also helps them widen their networks.

Six firms have been admitted since launch last December, including APT Commodities, which trades tea in the coastal city of Mombasa, Blue Nile Rolling Mills, a steel company and Globetrotter Agency, a travel company.

“So IBUKA makes sense because we want to grow, whether it is capital injection or market growth which is what everybody looks for, and especially if it is global growth. I want to do the recognition, I want to be recognized globally as well,” said Vidya Jethwa, the travel agency’s managing director.

At least three other private companies were likely to list their shares on the main market segment later this year, Odundo said, adding they were also discussing an initial public offering for the government’s National Oil Corporation.

The government plans to raise US$1 billion by listing National Oil this year, and to use it as a vehicle to hold its 25 percent interest in oil fields discovered in the north by Tullow Oil and its partners in 2012.