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CfC Insurance Holdings stirs up bourse

NAIROBI, Kenya, Apr 21- The Nairobi Stock Exchange (NSE) on Thursday witnessed the commencement of trading of the CfC Insurance Holdings shares which marks the resumption of listings at the bourse after a two and a half year lull.

The last time the market had a listing was in December 2008 when Cooperative Bank joined other listed companies.  NSE Chief Executive Officer Peter Mwangi expressed optimism that the entry of CfC Insurance represents good tidings for the bourse which has recovered from a two year downturn.

“This is a very auspicious event for us and there are already two other companies that have made formal applications with the Authority (Capital Markets Authority) and the Exchange to list and I am certain that they will be listed within the course of this year,” said the CEO during the bell ringing ceremony to mark the share introduction.

TransCentury and British American Investment Company are some of the firms that have also made public their intentions to list.

On its part, Mr Mwangi said NSE would strive to improve the trading infrastructure to enable all listed companies as well as other investors to benefit from a vibrant market.

Towards this end, the bourse has invested Sh100million to implement a Standard Broker BackOffice system that will be interfaced with the Automated Trading System and the Central Depository System with the aim of minimising trading risks and boosting investor confidence.

“We are now in a testing phase to optimise the customised performance system and we will proceed to launch and go live on the system in the not so distant future,” Mr Mwangi said.

Since 2008 when Kenya was hit by several shocks ranging from the effects of the post election violence to the global recession, equities were negatively impacted when many risk-averse investors fled to the bonds market which was perceived as a safety ground.

However, come 2010, the NSE was on an upward trajectory but companies preferred to use the avenue to raise capital largely through Rights Issues.  This led to 2010 being dubbed the “Year of the Rights Issues” with about Sh16billion raised. Listings and Initial Public Offerings were however shunned.

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The listing of CfC Insurance Holdings (CIHL) by way of introduction however opens the way for others who wish to come to the market and enjoy the incentives provided by the government.

Listing by introduction is an application for listing of shares already in issue and therefore no new shares are issued and neither is any additional capital raised.

For such companies’ shareholders and investors, they benefit from a price discovery and liquidity as well as an exit window for those who may wish to unlock the value of their investment.

“CIHL will now be subjected to continuous reporting and disclosure obligations which will bolster the structures of corporate governance and accountability and in the process increase shareholder value,” said Capital Markets Authority CEO Stella Kilonzo in a speech read on her behalf by the Authority’s Manager of Market Supervision Wycliffe Shamiah.

CMA said although there was no capital that was being raised in the transaction, CfC Insurance Holdings was subjected to a similar stringent listing criteria as those intending to raise funds from the public.

CfC Insurance Holding Regional Managing Director Mike du Toit said the listing of the 515.2million shares is a culmination of a complex process that followed the merger of Stanbic and CfC group and later a separation of the corporation’s insurance and banking divisions.

The share’s reference price was set at Sh6.52 and listing on the Main Investment Market Segment makes it the fourth insurance company after Kenya Re-Insurance, Pan Africa Insurance Holding and Jubilee Insurance Company.

This brings the number of listed firms under Finance and Investment Sector to 16 which trails the Industrial and Allied Sector at 17.

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