Bank of Kigali Group will soon be listed on the Nairobi Stock Exchange having received approvals from the Capital Markets Authority to cross-list by introduction.
Cross listing refers to offering a firm’s ordinary shares to other investors through a different exchange from its home exchange.
This enables the firm to acquire external financing, likely at a lower cost as compared to what the firm would have gotten from their home exchange.
“The cross-listing will facilitate cross-border investments, further strengthening the MoU entered into between capital markets regulators in Kenya, Uganda, Tanzania, Rwanda and Burundi through which a common blueprint on the integration of the East African capital markets was adopted,” CMA chief executive Paul Muthaura said.
He said the dual listing will further enhance Kenya's position as an international financial centre and gateway for regional and international capital flows.
Rwanda’s capital market was established in 2011 under the Capital Market Act of 2011. Since then the Rwanda Stock Exchange has listed eight firms, half of which are cross-listings by Kenyan companies.
These are Equity Group trading at 350 Rwandan francs, KCB Group at Fr 330, Nation Media Group at Fr 1,200, and Uchumi Supermarkets trading at Fr 104 as at 30, October. One Kenyan shilling is equivalent to Fr 8.71.
With market capitalisation at Fr 2.89 trillion (Sh331.80 billion), Bank of Kigali Group has been unable to unlock liquidity constraints and provide access to a wider pool of investors.
The Rwandese lender plans to raise Sh7 billion ($70 million) aimed at funding the group’s digitalization process, meet capital adequacy requirements and implement its growth strategy.
“Untaken Rights will be placed with qualified institutional investors on the NSE (rump shares) through a private placement, and thus will not be available to the general public in Kenya,” BK Group's information memorandum states.
An estimated 40 per cent of capital raised by the bank will fall under rump shares belonging to the minority group of investors who refuse to tender their shares in the rights issue.
Last year, CMA also approved the listing and trading of global depository notes and receipts as part of the authority’s 10-year capital markets master plan, geared towards diversification of Kenya’s capital markets.
This is aimed at enabling domestic firms issue shares in other countries without cross-listing on the stock exchange in those countries.
According to CMA a global depositary receipt or note is a negotiable certificate issued, listed and traded on a securities exchange. The certificate represents securities issued in another country.
Where the certificate represents ownership of bonds instead of shares, it is referred to as a global depository note.
The global depository receipts are seen as vehicles to support growth of the country’s national savings and investments from less than 15 per cent of gross domestic product to 30 per cent as stipulated in the Vision 2030.