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Ruto seeks to surpass Kibaki’s record of State-owned firms sold through the NSE

Ruto seeking to surpass Kibaki’s record of State-owned firms sold through the NSE with 10 Nairobi bourse IPOs (Nairobi Securities Exchange).

President William Ruto has set a target of surpassing the number of State-owned firms that the Mwai Kibaki administration sold through the Nairobi Securities Exchange (NSE).

Ruto announced on Tuesday that his administration would list six to ten companies at the market through initial public offers (IPOs). 

He also urged the private sector to list at least five companies at the NSE.

The listing of more State corporation shares will put an end to a six-year IPO drought at the NSE that began in October 2015 with the listing of the Stanlib Fahari REIT.

The last successful privatization by the government was the Safaricom IPO in 2008.

Between 2003 and 2008, former president Kibaki used the NSE to privatize six businesses, including Kengen, Kenya Reinsurance, Safaricom, and Mumias Sugar.

He leased out Kenya Railways Corporation through a concessionaire and strategically sold shares of Telkom Kenya.

During the Moi administration, Kenya privatized eight firms through open bids between 1990 and 2002, including CMC Holdings, National Bank, and Kenya Airways.

“As we prepare between six and 10 companies for listing in the stock exchange in the next 12 months, and I promise you we will deliver on that commitment, I also want to encourage the private sector as we bring 10 companies, please bring five,” Ruto said.

The President has indicated that his government will raise financing for government projects through the Nairobi bourse as opposed to borrowing from external markets.

Proceeds from privatization would earn the Ruto administration funds to meet budget shortfalls and reduce the burden on the exchequer, with a World Bank 2021 study estimating State corporations cost Kenya Sh532.2 billion in grants and subsidies.

Three of the dominant firms at the NSE — Safaricom, Equity, and Co-operative Bank — came into the market during the IPO boom years of 2005 to 2009.

Their dominance has made it difficult for investors to measure the true performance of the bourse due to the companies’ outsized influence on key market indicators.

The privatization plan comes in a period of market volatility, with foreign investors exiting emerging markets for better returns in western markets due to high-interest rates sharply.

The President did not name the companies targeted for privatization.

Previously, the government had targeted 26 firms for privatization, including Kenya Pipeline Company and parts of Kenya Ports Authority (KPA).

The government is also keen on selling hotels, including Kabarnet, Mt Elgon Lodge, Golf Hotel, Sunset, Kenya Safaris Lodges, and stakes in Hilton Group of Hotels, InterContinental Hotels Corporation, and Mountain Lodge Limited.

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