Power company's move seen as a positive move towards regional financial integration
Barely a fortnight after listing its shares on the Uganda Securities Exchange (USE), power company Umeme has marked another milestone by becoming the first Ugandan company to cross-list on the Nairobi Securities Exchange (NSE). This followed securing regulatory approval from the Capital Markets Authority. While seven Kenyan-registered companies are cross-listed on the USE, no Ugandan-registered company had ever been cross-listed anywhere in the world.
This means that if one is a shareholder of Umeme and resident in Kenya, one will be able to trade their shares on NSE through any brokerage member firms in the country. It will be more convenient and faster and cheaper for shareholders to sell their shares instead of having to travel to Uganda to transact on the USE. Also, Kenyans who may have wanted to buy but had missed out during the IPO or those who bought during IPO but would want to increase on their portfolio, could also trade now.
Umeme, first listed on the USE on Nov.30 and was oversubscribed by 37%. Officials said the NSE will get the closing prices from the USE before each trading day to determine the current share price of the counter after conversion to the Kenyan Shillings.
Speaking at the bell ringing event in Nairobi on Dec.14, Patrick Bitature, the Umeme chairman, said Umeme was proud to be the first ever Ugandan company to cross list, adding that it was a regional milestone. He said the cross listing on "the largest and most established securities exchange in the region" was the company's long term strategy. He added that Kenyan investors had shown great interest in the company's shares, through their impressive participation at the IPO.
"Access to trading at both NSE and USE will increase convenience for our investors to trade, while boosting liquidity in the stock," he said.
Peter Mwangi, the NSE CEO, described the cross-listing as a "truly historical occasion" which had seen the introduction of the more than 1.6 million shares of Umeme Holdings Ltd on the Main Investment Market Segment (MIMS) of the NSE. He added that it is the first inward cross listing of an East African company on the NSE since the incorporation of the East African Stock Exchanges Association on May 15, 2009. "The cross listing marks a milestone in the initiatives of the members of the Association to integrate the East African stock markets," he said.
According to the NSE market report as at Dec.14, the Umeme counter opened at Kshs 8.80 while at USE the counter's opening and closing price was Shs 275. Following its listing on the USE, the company's counter has now overtaken Stanbic as the most active and has had the highest numbers of shares traded and turnover.
Umeme's cross listing comes at a time when regional heads of capital markets in Uganda, Rwanda, Tanzania, Kenya and Burundi have been in talks to develop mechanisms to integrate the capital markets to harmonize market infrastructure while strengthening regional surveillance mechanisms. The East African market is seen as providing an opportunity to not only grow market segments but also position local companies better on the continent as a whole"
Paul Mathaura, the CEO of the Capital Markets Authority of Kenya, also shared similar sentiment, saying the move marks a positive step towards the establishment of an integrated regional market. "For a long time, we had one way transactions, where Kenyan companies cross listed at USE and Rwanda Stock Exchange while no companies from these countries traded at NSE," he said.
"Umeme's listing at the NSE marks an important moment for this region and I hope it heralds the start of a new way of doing business in the region."