Kenya's Capital Markets Authority is reviewing the requirements for firms wishing to list on the country's stock exchange in a bid to weed out unnecessary barriers and attract new listings, Paul Muthaura, the regulator's chief, told Reuters May 15.
The rules being reviewed include requirements for companies to be profitable in three of the past five years before listing and another that fixes standards on debt-to-equity levels, the report said. The Nairobi Securities Exchange Ltd., which has a market capitalization of about 2.8 trillion Kenyan shillings, has struggled to attract new listings, with daily trading dominated by a few large companies, it added.
Muthaura reportedly said having a single dominating firm poses risks that will affect the entire market should anything happen to that firm, but more listings of large companies will diffuse that risk. Only six firms make up 75% of NSE's market capitalization, with telecom company Safaricom Ltd accounting for 1.22 trillion shillings, the report said, citing Thomson Reuters data.
Part of the reason why firms are reluctant to list is that they fear that company disclosures, which come with going public, will reveal business secrets to competitors, Muthaura told the newswire. Although he did not name any companies that will be up for listing in Kenya, he said an industry masterplan had set targets of at least three or four listings per year until 2023.
As of May 15, US$1 was equivalent to 100.33 Kenyan shillings.