Kenyan Firms Eye Listing on the London Stock Exchange
Close to 15 companies in Kenya have shown interest in raising capital through an Initial Public Offer (IPO) at the London Stock Exchange.
According to Matthew Howell, a partner at Deloitte’s Capital Markets in London, the companies now need proper advice on how to go about the process of listing on one of the world’s biggest securities markets.
He said the key qualification for any company is stability in growth in the past five years and demonstration of potential to expand.
At a meeting with several corporate leaders in Nairobi, Howell said the London exchange was increasingly growing in confidence with most companies in Africa and would be willing to admit them.
“We are here to help people build momentum and understanding of what they are supposed to do to raise capital overseas. Whether it’s equity or debt, we can help them on that journey,” said Howell.
He disclosed that Deloitte’s Capital Markets team is visiting several companies in Africa that have interest in investing at the bourse to give advice on how to go about the process, the benefits of raising capital in overseas markets as well as the risk or successes expected.
Howell insisted that any company willing to list on the London exchange must have good and balanced management teams, right governance structure, in accordance with the given regulation, growth in assets and a clear history of transparency in the management of finances.
“Some companies may want to invest in London some amount of money which could be raised in the local stock market or alternative means, so in this case we would tell them to hold,” he said.
The minimum amount any company would raise in an IPO at the exchange is $5 million (Sh424.9million).
“We are working with African countries that are looking to raise money in London and Europe at large. And we thought we should come here in Nairobi and talk to some companies on how they would access capital in London,” Howell said, saying other suitable markets include India, China, Russia and Latin America.
He added that the London bourse may concentrate more on companies that are in the Oil and gas industry.
“Oil and exploration companies would qualify easily in launching an IPO at LSE, because of their sustainability and expected long-term strength,” he added.
London Stock Exchange has an alternative investment market segment (AIM) for firms seeking to raise capital of $50 million to $100 million. Already a number of companies from South Africa and India have listed through this channel.
There is also the LSE Main Market with deeper levels of liquidity and which is a flagship market for larger companies seeking to raise larger pools of capital mainly from Europe.