Kenya’s Nairobi Securities Exchange is looking to buy up more stakes in bourses across Africa, its chief executive said on Monday, with a view to eventually becoming a pan-continental exchange.
The bourse, the fifth biggest by market capitalisation in Africa, already owns a 4.9% stake in neighbouring Tanzania’s Dar es Salaam Stock Exchange, and is eyeing other bourses in countries like Nigeria and Botswana following their demutualisation, its CEO Geoffrey Odundo said.
“We can become a pan-African exchange in the long term, so we are looking at how we can use this opportunity,” he said. The group is keen to see the valuation of Uganda’s bourse when the shares are offered to investors at a later date, he added.
To fund acquisitions, the NSE has cash reserves of up to 1.5 billion shillings ($12.98 million), Odundo said.
The exchange is also looking at buying stakes in related businesses like technology and depository services, he said. “Acquisitions are a key focus for us,” he told reporters.
The exchange, which for 2021 offered investors a 17% dividend yield, is also holding discussions with two Kenyan technology firms to boost its securities trading infrastructure, Odundo said, without giving details.
Africa, made up of 54 nations, has just 29 exchanges, meaning there will be opportunities to offer securities trading technology when the others set up their bourses, the CEO said.
The bourse was in a strong position to fend off competition from a new bond trading exchange being set up in Kenya, he said, since it offers many products, including derivatives.
The NSE is selling its head office in a Nairobi suburb in favour of leasing, Odundo said. “Property is not a space for us,” he added.
NSE turnover has been depressed in the past month by heightened geopolitical risk caused by the Ukraine crisis, he said.
Kenya is holding a general election on Aug. 9, which could feed volatility in the market, Odundo said. However, he expressed optimism that the adverse impact will be low.
“We are cautiously optimistic,” he said. “Investors have priced down the political risk.”