The Nairobi Securities Exchange has reserved 2.5 million shares for its employees in its Initial Public Offering that opens today, handing them a 1.18 per cent stake in the bourse.
Another 63.5 million shares will be sold to the public, bringing the total sale to 31.06 per cent of NSE's 212.5 million authorised shares. The offer price per share is Sh9.50, with the minimum application size set at 500 pieces for Sh4,750.
NSE staff will thus have to put in Sh23.75 million while other buyers will inject Sh603.25 million.
The offer price values the NSE at Sh2.02 billion, more than twice the par value (face value) of Sh850 million at Sh4 a piece.
The offer closes on August 12 and results will be announced on September 3. Shares sold will commence trading on September 9 when the NSE will self-list.
The bourse was hitherto owned by 22 stockbrokerages and investment banks (4.08 per cent each), Investor Compensation Fund (5.1 per cent) and the National Treasury (5.1 per cent). Existing shareholders will absorb a 33.91 per cent immediate dilution.
"The self-listing of NSE will enable those who buy participate in the growth we see coming into the Kenyan market, and a more liquid market will attract more capital," said chief executive Peter Mwangi.
The demutualisation process, detaching ownership of NSE from management, gathered pace when the Capital Markets Act was amended in 2010 to facilitate the process.
"We have always been seen as a club for the elite but now any Kenyan can buy into the NSE," said Eddy Njoroge, NSE's chairman.
The law requires that at least 40 per cent be allocated to local investors, and not less than 1,000 individuals should hold 25 per cent in a public offering.
If fully subscribed, the 66 million shares will earn NSE Sh363 million or a net gain of 137.5 per cent from the stake.
In the prospectus, NSE says the net proceeds will be invested in new infrastructure to support expansion initiatives, reduce its mortgage debt, and place seed capital for the settlement guarantee fund for futures.
NSE intends to establish a derivatives exchange where futures and options will be traded, offering a hedge against interest rate fluctuations, exchange rate volatility and commodity price changes while boosting liquidity of the specific assets.
It has already set up a subsidiary - NSE Clear Ltd - to provide clearing house services for the proposed derivatives and futures exchange but is currently inactive.
"The new products will have an incremental input to the company's top line," Njoroge said.
NSE has Sh1.14 billion in total assets, including its new five-storey building (The Exchange) housing it in Westlands, which was bought partly with a Sh300 million mortgage facility from KCB.
NSE also owns a 22.5 per cent stake in the Central Depository and Settlement Corporation Ltd which offers besides settlement and depository services such as CDS accounts to stock buyers.