Edward H Ntalami
Encyclopedia
Edward Haggai Ntalami is a leading business executive and the former CEO of the Capital Markets Authority (CMA), which is an an equivalent of the Securities Exchange Commission (SEC) in the U.S.
or the Financial Services Authority
(FSA) in the UK. A prominent public finance figure , Ntalami is predominantly known for his vast involvements in Kenya’s capital markets. He has served for over two decades in financial planning and management in the fields of commerce and industry, public sector, and the profession. Prior to his appointment at the CMA, Ntalami was the Executive Director of Sterling Securities Limited, a local stock broking outfit. He was later ppointed Chief Executive, Capital Markets Authority in December 2002 by His Excellency President Mwai Kibaki
. He completed his first term in office on 17 December 2007 upon which he chose not to renew his tenure for a second period. The current head at the helm of the CMA, after a seven-month long search, is Stella Kilonzo
.
(formerly Strathmore College), where in 1974 he qualified as a Fellow of the Association of Chartered Certified Accountants
(ACCA) of the United Kingdom
. At the age of 28, having already secured worthwhile employment with Housing Finance Company of Kenya
(HFCK) Limited, Ntalami was awarded a rare scholarship opportunity by the Government of Kenya to pursue a Master of Business Administration
(MBA) degree from the University of Sheffield
, England
. He accepted the offer, leaving for UK for a period of three years to further his education with a concentration in accounting and finance. After completing his MBA, Ntalami returned to his homeland, where in 1979 he qualified as a member of the Institute of Certified Public Accountants (CPA), Kenya
.
Ntalami has had a rich career in finance and commerce spurning over a quarter of a century and culminating in his appointment as Chief Executive of the Capital Markets Authority, Kenya.
He began his profession in 1970 as an audit
trainee with the City Council of Nairobi
where he served for a period of two years. He later joined Magadi Soda Company
(MSC) Limited, a mineral mining outfit serving as an Assistant Accountant at a period where the country had just attained its independence and racial discrimination was rife in the local employment scene. After two brief years at the company Ntalami left MSC having been granted an offer by Ernst and Young, a prominent international audit firm. He served as a senior audit assistant before later transferring to Housing Finance Company of Kenya (HFCK) Limited, a local real estate financier. Here, he worked as the Senior Accountant for a period of three years, harnessing this opportunity to secure a personal residence in Riara, Kilimani - an affluent suburb on the outskirts of Nairobi.
Later on, Ntalami served as Chief Accountant (and later, Ag. CEO) for the country’s premier national flag carrier, Kenya Airways
, for a period of four years; a time that was characterized by robust performance of the Kenyan economy, translating into a bustling era for the airline industry.
The early 1980s, which was billed as the golden moment for local indigenous accounting firms, Ntalami became Partner
at Kimani Onyancha & Company, a medium size firm of Certified Public Accountants involved primarily in the provision of statutory audits. He held special responsibility for the management consultancy services (MCS).
In 1995, after ten years of entrepreneurial accounting experience with KO& Co., he moved to transfer this exposure into the mainstream finance industry, choosing to enter the then budding yet vibrant line of stock broker
age. He served as Executive Director for Sterling Securities Limited (SSL), a then fledgling stock broking outfit.
Here, Ntalami participated in a number of private and public share issues and floatation, including initial public offerings (IPOs), divestiture, and privatization
of public enterprises. At its peak in 1996, SSL was retained by Kenya Commercial Bank
(KCB) as a sponsoring broker during its third share issue, which was hailed by financial analysts and critics alike as an unprecedented success in the country’s nascent finance industry.
By 1998, notwithstanding the exceptional success of the firm as a whole, internal conflicts and disagreements amongst partners began to afflict the business. Despite seeking legal recourse
, attempts to resolve these business differences were futile and gradually attracted unwarranted media attention. Eventually after one year of legal tussles the partnership was dissolved culminating in the premature fold-up of the firm, in a bad year that was coupled by the poor performance of the economy.
Subsequently, on Wednesday, August 11, 1999, Sterling Securities Limited (SSL) was suspended from trading on the NSE. The Capital Markets Authority (CMA), then, cited 'operational and managerial constraints' as the reason for suspension. The broker has since resumed its operations.
Following the unexpected restructuring of the stockbroking business, Ntalami left to open and operate a Financial and Investment consultancy firm, Marited Associates, the name being a joint conjunction of “Maria” (his wife) and “Ted” (short for Edward).
Ntalami operated this stint for a period of two years before being called up in December, 2002 by His Excellency President Mwai Kibaki
to serve in public office as the Chief Executive of the Capital Markets Authority, following a major cabinet
and public service
reshuffle.
In December 2002, following an extensive re-organization of the Public Service, Ntalami was appointed by His Excellency President Mwai Kibaki
as the Chief Executive of the Capital Markets Authority (CMA) in place of Paul. K. Melly. A new Chairman, Mr. Chege Waruinge, the Vice-Chancellor of Gretsa University and who was then Dean Professor Academic Affairs, United States Internatioanl University (USIU), was also appointed. On 14 January 2009 Prof Waruinge, tendered his resignation to the regulator’s board. The reasons for his departure were not immediately clear.
Ntalami completed his first term in office on 17 December 2007 upon which he chose not to renew his contract. His departure was immediately followed by the exit of Christine Mweti, the Head of Legal Services who was second in command at CMA, who has since moved to Renaissance Capital. Stella Kilonzo
, was appointed the CMA acting chief executive while a rigorous recruiting effort has been under way. She was later confirmed as CEO on 15 July 2008
Some of the key events that have characterized the Chief Executive’s tenure include:
The Government sold 40 per cent of its stake in the 37-year-old reinsurance
firm, or 240 million shares, through an initial public offering
(IPO) at the Nairobi Stock Exchange
(NSE). The IPO opened on 18 July 2007, and closed on 31 July 2007. The IPO was oversubscribed by an average of 363.5 per cent with the retail segment, recording the highest oversubscription of 715 per cent. For the first time ever, the transaction team implemented the delivery versus payment
(DVP) method, which allowed institutional investors and insurance firms to hold off payment until the share allocation was completed. http://allafrica.com/stories/200708061780.html
Kenya Reinsurance shares closed their first day of trading at KSh15.75. This was 65.78 per cent higher than the share offer price of Sh9.50 a share, a significant gain for shareholders.
On July 20, 2007, the Nairobi Stock Exchange
(NSE) revised the companies listed on its main share index to replace inactive stocks. The 20-Share Index is a reflection of the twenty (20) most actively trading counters in Kenya and was last reviewed in May 2003.
In the financial sector, ICDCI replaced NIC Bank, while in the industrial sector; KenGen replaced BOC Gases, whose shares were suspended following the proposed merger with Carbacid Investments
(see below). In the Agricultural sector, Rea Vipingo
replaced Kakuzi, whereas, Mumias Sugar
Company replaced Unilever Tea. In the Commercial and Service Sector, CMC replaced Uchumi
Supermarkets Limited (under receivership - see below).
The review of the NSE 20-share index was done to bring on board newly listed firms with active trading track-records and would see the NSE market capitalization
increase substantially with the entry of the profitable firms from the country's fastest growing economic sectors. It is expected that this will give the market a better image, which reflects the true value of the bourse
as opposed to retaining less active stocks in the Index. http://english.people.com.cn/90001/90778/6220960.htmlhttp://www.kbc.co.ke/story.asp?ID=43883
On June 4, 2007 the AccessKenya Group was listed on the Nairobi Stock Exchange
, becoming the first Information Communication Technology (ICT) company to do so. The web firm, which provides wireless access and email, said the listing for 800 million Kenyan shillings (U.S.$11.9 million) was oversubscribed by 363% with every category, from wealthy investors to institutional investors being fully subscribed.
The IPO also heralded the creation of a fifth investment segment at the bourse - the technology sector. This is in addition to the already existing agricultural, commercial and services, finance and investment and industrial and allied sectors.
The shares began trading at Sh14 with 1,000,000 shares changing hands within an hour of the opening bell.
An attempted takeover bid of Carbacid Investments
by BOC Group was aborted after the capital markets regulator declined to endorse the deal. In May 2006, the CMA argued that the latter had not met all the terms it had stated in an offer to Carbacid shareholders. The critical condition in the deal to warrant the takeover and subsequent delisting of Carbacid from the NSE was that at least 80 per cent of Carbacid shareholders had to back the takeover transaction, but only owners holding 71.0 per cent backed the transaction. Ironically, a ruling by the Capital Markets Tribunal okayed the takeover forcing the CMA to appeal against the ruling. Mr Ntalami said the approval of the takeover deal was likely to set a bad precedent that would plunge future takeovers of listed companies into chaos.
The protracted takeover saga, that has seen the two counters suspended for over four(4) years was resolved in November, 2009, as trading in carbon dioxide manufacturer Carbacid shares resumed after suspension since 2005.
On September 11, 2006 the Nairobi Stock Exchange migrated from the hitherto Open Outcry system to the Automated Trading System (ATS), an electronic trading platform. The President commissioned the new technology on 25 October 2006.
The change is expected to double the value of shares traded each day on the bourse with enhanced integrity and efficiency. Investors are now able to access current information thus facilitating them to make informed investment decisions on timely basis.
On December 17, 2007, the NSE completed its migration from the open outcry trading floor method to an all encompassing Wide Area Network
(WAN) trading system which allows stockbrokers to trade from the comfort of their offices.
Listing and official trading of Equity Bank shares on the NSE commenced on 7 August 2006; a day which saw the price move from Kes. 70 to Kes. 158 in a single price setting deal involving 1000 shares.
On 17 July 2006, the initial public offer of Scangroup Limited shares kicked off what was to be a historical listing at the NSE. Scangroup, became the first marketing
services company in Africa to go public through an IPO. The advertising house, an intelligence-intensive outfit, offloaded 69 million company shares into the capital markets at an offer price of Kes 10.45 per share. The IPO was oversubscribed by 520% and official trading of the company’s shares on the NSE) commenced on the August 29, 2006.
The Scangroup share price rose by 39% on its first day of trading to close the day at Kes. 15 with 3, 056,000 shares exchanging hands.
In April 2006, the Government offloaded 659.51 million shares in Kenya Electric Generating Company (KenGen) through the capital markets. The IPO premiered at the NSE at a discounted price of Kes. 11.90 price before rallying to a high of Sh40, representing a massive fourfold jump. The success of the IPO is credited for spurring the current appetite and excitement for investing in Kenya.
On April 25, 2007, an intended secondary offer for the shares, in pursuance of the IPO's initial success, was abruptly postponed by former Finance Minister Amos Kimunya
attributing the move to the prevailing share price being very low and the bulk tariff conflict between Kengen and KPLC. http://www.timesnews.co.ke/20may07/insight/ins1.html
On December 23, 2005, CFCStanbic Bank officially listed 12.0 million new shares, arising out of its successfully completed rights issue. The bank succeeded in raising the Kes. 744 million (U.S.$10 million) needed to align its capital base with Central Bank of Kenya risk management guidelines.
In October 2005, the retail chain, already facing serious financial challenges, received approval from the CMA for its shareholders to inject an extra Kes. 1.1 billion (U.S.$15 million) through a rights share issue.
In May 2007, a year after the near-collapse of the retail supermarket, attention shifted to renewed efforts toward the retail chain's tortuous recovery strategy. The company's receiver-managers, led by Mr Jonanthan Ciano, offered shareholders yet another chance to inject Sh800 million (U.S.$ 11.4 million) into the company under a new recapitalisation plan. Analysts then observed that were the plan to fail due to shareholder reluctance, the retail chain would have to find a new equity partner to fund its recovery.
The highly successful Kenya Commercial Bank
rights issue in September 2004, mobilized in excess of Kes. 2.3 billion (U.S.$31 million) needed for the bank's growth strategy. The rights offer for 50 million shares at a price of Kshs 49.00, was oversubscribed by 12.25%, necessitating a refund of Kes. 310 million (U.S.$4.1million) to applicants following shortage of untaken rights for allotment.
“The board of the Authority has reviewed the award and considers that it raises significant legal and policy issues with far reaching implications on the long term operations of the capital markets in Kenya.”
“Regulation only mitigates but does not guarantee against islotated instances of failure by licencees.”
“...invest with your eyes open!”
“The right to invest or not to invest cannot be taken away from him!”
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
or the Financial Services Authority
Financial Services Authority
The Financial Services Authority is a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. Its board is appointed by the Treasury and the organisation is structured as a company limited by guarantee and owned by the UK government. Its main...
(FSA) in the UK. A prominent public finance figure , Ntalami is predominantly known for his vast involvements in Kenya’s capital markets. He has served for over two decades in financial planning and management in the fields of commerce and industry, public sector, and the profession. Prior to his appointment at the CMA, Ntalami was the Executive Director of Sterling Securities Limited, a local stock broking outfit. He was later ppointed Chief Executive, Capital Markets Authority in December 2002 by His Excellency President Mwai Kibaki
Mwai Kibaki
Mwai Kibaki is the current and third President of the republic of Kenya.Kibaki was previously Vice President of Kenya for ten years from 1978–1988 and also held cabinet ministerial positions, including a widely acclaimed stint as Minister for Finance , Minister for Home Affairs and Minister for...
. He completed his first term in office on 17 December 2007 upon which he chose not to renew his tenure for a second period. The current head at the helm of the CMA, after a seven-month long search, is Stella Kilonzo
Stella Kilonzo
Stella Kilonzo, is a Kenyan accountant and business administrator. Currently she serves as the Chief Executive Officer of the Capital Markets Authority . She was appointed to that position in July 2008.-Background and education:...
.
Background
Ntalami's father Mzee Nkárachiá, was a prominent local elder who was renowned for his vast herds of cattle and livestock. It has been said that his extensive herd of cattle would cause massive jams of traffic as they crossed village roads and highways.Education
He was educated at Strathmore UniversityStrathmore University
Strathmore University is a private university based in Nairobi, Kenya. Strathmore College was started in 1961, as an Advanced level sixth form College offering science and arts subjects, by a group of professionals who formed a charitable educational trust...
(formerly Strathmore College), where in 1974 he qualified as a Fellow of the Association of Chartered Certified Accountants
Association of Chartered Certified Accountants
Founded in 1904, the Association of Chartered Certified Accountants is the global body for professional accountants offering the Chartered Certified Accountant qualification . it is one of the largest and fastest-growing global accountancy bodies with 147,000 members and 424,000 students in 170...
(ACCA) of the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
. At the age of 28, having already secured worthwhile employment with Housing Finance Company of Kenya
Housing Finance Company of Kenya
Housing Finance Company of Kenya, whose official name is Housing Finance Company Limited, but is also known as Housing Finance ', is a mortgage finance provider in Kenya...
(HFCK) Limited, Ntalami was awarded a rare scholarship opportunity by the Government of Kenya to pursue a Master of Business Administration
Master of Business Administration
The Master of Business Administration is a :master's degree in business administration, which attracts people from a wide range of academic disciplines. The MBA designation originated in the United States, emerging from the late 19th century as the country industrialized and companies sought out...
(MBA) degree from the University of Sheffield
University of Sheffield
The University of Sheffield is a research university based in the city of Sheffield in South Yorkshire, England. It is one of the original 'red brick' universities and is a member of the Russell Group of leading research intensive universities...
, England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
. He accepted the offer, leaving for UK for a period of three years to further his education with a concentration in accounting and finance. After completing his MBA, Ntalami returned to his homeland, where in 1979 he qualified as a member of the Institute of Certified Public Accountants (CPA), Kenya
Kenya
Kenya , officially known as the Republic of Kenya, is a country in East Africa that lies on the equator, with the Indian Ocean to its south-east...
.
Career
He began his profession in 1970 as an audit
Audit
The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product. The term most commonly refers to audits in accounting, but similar concepts also exist in project management, quality management, and energy conservation.- Accounting...
trainee with the City Council of Nairobi
Nairobi
Nairobi is the capital and largest city of Kenya. The city and its surrounding area also forms the Nairobi County. The name "Nairobi" comes from the Maasai phrase Enkare Nyirobi, which translates to "the place of cool waters". However, it is popularly known as the "Green City in the Sun" and is...
where he served for a period of two years. He later joined Magadi Soda Company
Magadi Soda Company
The Madagi Soda Company manufactures soda ash at the Kenyan town of Magadi, which is in southwestern Kenya. It is the largest manufacturer of soda ash in Africa. The company was founded in 1911 and mines trona from Lake Magadi, in the Rift Valley. Lake Magadi has one of the purest surface deposits...
(MSC) Limited, a mineral mining outfit serving as an Assistant Accountant at a period where the country had just attained its independence and racial discrimination was rife in the local employment scene. After two brief years at the company Ntalami left MSC having been granted an offer by Ernst and Young, a prominent international audit firm. He served as a senior audit assistant before later transferring to Housing Finance Company of Kenya (HFCK) Limited, a local real estate financier. Here, he worked as the Senior Accountant for a period of three years, harnessing this opportunity to secure a personal residence in Riara, Kilimani - an affluent suburb on the outskirts of Nairobi.
Later on, Ntalami served as Chief Accountant (and later, Ag. CEO) for the country’s premier national flag carrier, Kenya Airways
Kenya Airways
Kenya Airways Ltd., more commonly known as Kenya Airways, is the flag carrier and largest airline of Kenya. The company was founded in 1977, after the dissolution of East African Airways. The carrier's head office is located in Embakasi, Nairobi, with its main base at Jomo Kenyatta International...
, for a period of four years; a time that was characterized by robust performance of the Kenyan economy, translating into a bustling era for the airline industry.
The early 1980s, which was billed as the golden moment for local indigenous accounting firms, Ntalami became Partner
Partner (business rank)
A partner in a law firm, accounting firm, consulting firm, or financial firm is a highly ranked position. Originally, these businesses were set up as legal partnerships in which the partners were entitled to a share of the profits of the enterprise. The name has remained even though many of these...
at Kimani Onyancha & Company, a medium size firm of Certified Public Accountants involved primarily in the provision of statutory audits. He held special responsibility for the management consultancy services (MCS).
In 1995, after ten years of entrepreneurial accounting experience with KO& Co., he moved to transfer this exposure into the mainstream finance industry, choosing to enter the then budding yet vibrant line of stock broker
Stock broker
A stock broker or stockbroker is a regulated professional broker who buys and sells shares and other securities through market makers or Agency Only Firms on behalf of investors...
age. He served as Executive Director for Sterling Securities Limited (SSL), a then fledgling stock broking outfit.
Here, Ntalami participated in a number of private and public share issues and floatation, including initial public offerings (IPOs), divestiture, and privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
of public enterprises. At its peak in 1996, SSL was retained by Kenya Commercial Bank
Kenya Commercial Bank
Kenya Commercial Bank is a financial services provider headquartered in Nairobi, Kenya. , it was among the three largest commercial banks in Kenya with assets of more than US$2.65 billion , and shareholders capital valued at US$486 million . The other two large Kenyan commercial banks are Barclays...
(KCB) as a sponsoring broker during its third share issue, which was hailed by financial analysts and critics alike as an unprecedented success in the country’s nascent finance industry.
By 1998, notwithstanding the exceptional success of the firm as a whole, internal conflicts and disagreements amongst partners began to afflict the business. Despite seeking legal recourse
Legal recourse
A legal recourse is an action that can be taken by an individual or a corporation to attempt to remedy a legal difficulty.* A lawsuit if the issue is a matter of civil law* Many contracts require mediation or arbitration before a dispute can go to court...
, attempts to resolve these business differences were futile and gradually attracted unwarranted media attention. Eventually after one year of legal tussles the partnership was dissolved culminating in the premature fold-up of the firm, in a bad year that was coupled by the poor performance of the economy.
Subsequently, on Wednesday, August 11, 1999, Sterling Securities Limited (SSL) was suspended from trading on the NSE. The Capital Markets Authority (CMA), then, cited 'operational and managerial constraints' as the reason for suspension. The broker has since resumed its operations.
Following the unexpected restructuring of the stockbroking business, Ntalami left to open and operate a Financial and Investment consultancy firm, Marited Associates, the name being a joint conjunction of “Maria” (his wife) and “Ted” (short for Edward).
Ntalami operated this stint for a period of two years before being called up in December, 2002 by His Excellency President Mwai Kibaki
Mwai Kibaki
Mwai Kibaki is the current and third President of the republic of Kenya.Kibaki was previously Vice President of Kenya for ten years from 1978–1988 and also held cabinet ministerial positions, including a widely acclaimed stint as Minister for Finance , Minister for Home Affairs and Minister for...
to serve in public office as the Chief Executive of the Capital Markets Authority, following a major cabinet
Cabinet (government)
A Cabinet is a body of high ranking government officials, typically representing the executive branch. It can also sometimes be referred to as the Council of Ministers, an Executive Council, or an Executive Committee.- Overview :...
and public service
Civil service
The term civil service has two distinct meanings:* A branch of governmental service in which individuals are employed on the basis of professional merit as proven by competitive examinations....
reshuffle.
Capital Markets Authority (CMA)
Mwai Kibaki
Mwai Kibaki is the current and third President of the republic of Kenya.Kibaki was previously Vice President of Kenya for ten years from 1978–1988 and also held cabinet ministerial positions, including a widely acclaimed stint as Minister for Finance , Minister for Home Affairs and Minister for...
as the Chief Executive of the Capital Markets Authority (CMA) in place of Paul. K. Melly. A new Chairman, Mr. Chege Waruinge, the Vice-Chancellor of Gretsa University and who was then Dean Professor Academic Affairs, United States Internatioanl University (USIU), was also appointed. On 14 January 2009 Prof Waruinge, tendered his resignation to the regulator’s board. The reasons for his departure were not immediately clear.
Ntalami completed his first term in office on 17 December 2007 upon which he chose not to renew his contract. His departure was immediately followed by the exit of Christine Mweti, the Head of Legal Services who was second in command at CMA, who has since moved to Renaissance Capital. Stella Kilonzo
Stella Kilonzo
Stella Kilonzo, is a Kenyan accountant and business administrator. Currently she serves as the Chief Executive Officer of the Capital Markets Authority . She was appointed to that position in July 2008.-Background and education:...
, was appointed the CMA acting chief executive while a rigorous recruiting effort has been under way. She was later confirmed as CEO on 15 July 2008
Highlights of tenure
- Kenya Re initial public offering:
The Government sold 40 per cent of its stake in the 37-year-old reinsurance
Reinsurance
Reinsurance is insurance that is purchased by an insurance company from another insurance company as a means of risk management...
firm, or 240 million shares, through an initial public offering
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
(IPO) at the Nairobi Stock Exchange
Nairobi Stock Exchange
The Nairobi Securities Exchange is the principal stock exchange of Kenya. It began in 1954 as an overseas stock exchange while Kenya was still a British colony with permission of the London Stock Exchange. The NSE is a member of the African Stock Exchanges Association...
(NSE). The IPO opened on 18 July 2007, and closed on 31 July 2007. The IPO was oversubscribed by an average of 363.5 per cent with the retail segment, recording the highest oversubscription of 715 per cent. For the first time ever, the transaction team implemented the delivery versus payment
Delivery versus payment
"Payment at the moment of delivery".Delivery versus payment or DVP is a sale transaction of negotiable securities that can be instructed to a settlement agent using SWIFT Message Type MT 543...
(DVP) method, which allowed institutional investors and insurance firms to hold off payment until the share allocation was completed. http://allafrica.com/stories/200708061780.html
Kenya Reinsurance shares closed their first day of trading at KSh15.75. This was 65.78 per cent higher than the share offer price of Sh9.50 a share, a significant gain for shareholders.
- NSE revises stock market index:
On July 20, 2007, the Nairobi Stock Exchange
Nairobi Stock Exchange
The Nairobi Securities Exchange is the principal stock exchange of Kenya. It began in 1954 as an overseas stock exchange while Kenya was still a British colony with permission of the London Stock Exchange. The NSE is a member of the African Stock Exchanges Association...
(NSE) revised the companies listed on its main share index to replace inactive stocks. The 20-Share Index is a reflection of the twenty (20) most actively trading counters in Kenya and was last reviewed in May 2003.
In the financial sector, ICDCI replaced NIC Bank, while in the industrial sector; KenGen replaced BOC Gases, whose shares were suspended following the proposed merger with Carbacid Investments
Carbacid Investments
Carbacid Investments is a carbon dioxide company in Kenya. It is based in Nairobi and it is listed on the Nairobi Stock Exchange.-Operations:...
(see below). In the Agricultural sector, Rea Vipingo
Rea Vipingo
Rea Vipingo is a company that operates sisal plantations in Kenya and Tanzania. The company's headquarters are located in Nairobi. Its stock is listed on the Nairobi Stock Exchange.-External links:***...
replaced Kakuzi, whereas, Mumias Sugar
Mumias Sugar
Mumias Sugar is a sugar company in Kenya. It has headquarters in Nairobi and operations in Mumias. Its name is abbreviated to MSC. Mumias is listed on the Nairobi Stock Exchange....
Company replaced Unilever Tea. In the Commercial and Service Sector, CMC replaced Uchumi
Uchumi
Uchumi Supermarkets, often referred to simply as Uchumi, is a Kenyan supermarket chain. The name Uchumi means "economy" in Swahili.-Overview:...
Supermarkets Limited (under receivership - see below).
The review of the NSE 20-share index was done to bring on board newly listed firms with active trading track-records and would see the NSE market capitalization
Market capitalization
Market capitalization is a measurement of the value of the ownership interest that shareholders hold in a business enterprise. It is equal to the share price times the number of shares outstanding of a publicly traded company...
increase substantially with the entry of the profitable firms from the country's fastest growing economic sectors. It is expected that this will give the market a better image, which reflects the true value of the bourse
Bourse
Bourse may refer to:*exchange *stock exchange*Bourse : metro station, Paris, France*Bourse de Travail: French labor council-Exchanges:*Paris Bourse: Euronext Paris, historical Paris stock exchange...
as opposed to retaining less active stocks in the Index. http://english.people.com.cn/90001/90778/6220960.htmlhttp://www.kbc.co.ke/story.asp?ID=43883
- AccessKenya initial public offering:
On June 4, 2007 the AccessKenya Group was listed on the Nairobi Stock Exchange
Nairobi Stock Exchange
The Nairobi Securities Exchange is the principal stock exchange of Kenya. It began in 1954 as an overseas stock exchange while Kenya was still a British colony with permission of the London Stock Exchange. The NSE is a member of the African Stock Exchanges Association...
, becoming the first Information Communication Technology (ICT) company to do so. The web firm, which provides wireless access and email, said the listing for 800 million Kenyan shillings (U.S.$11.9 million) was oversubscribed by 363% with every category, from wealthy investors to institutional investors being fully subscribed.
The IPO also heralded the creation of a fifth investment segment at the bourse - the technology sector. This is in addition to the already existing agricultural, commercial and services, finance and investment and industrial and allied sectors.
The shares began trading at Sh14 with 1,000,000 shares changing hands within an hour of the opening bell.
- The Carbacid Investments vs BOC Group tussle:
An attempted takeover bid of Carbacid Investments
Carbacid Investments
Carbacid Investments is a carbon dioxide company in Kenya. It is based in Nairobi and it is listed on the Nairobi Stock Exchange.-Operations:...
by BOC Group was aborted after the capital markets regulator declined to endorse the deal. In May 2006, the CMA argued that the latter had not met all the terms it had stated in an offer to Carbacid shareholders. The critical condition in the deal to warrant the takeover and subsequent delisting of Carbacid from the NSE was that at least 80 per cent of Carbacid shareholders had to back the takeover transaction, but only owners holding 71.0 per cent backed the transaction. Ironically, a ruling by the Capital Markets Tribunal okayed the takeover forcing the CMA to appeal against the ruling. Mr Ntalami said the approval of the takeover deal was likely to set a bad precedent that would plunge future takeovers of listed companies into chaos.
The protracted takeover saga, that has seen the two counters suspended for over four(4) years was resolved in November, 2009, as trading in carbon dioxide manufacturer Carbacid shares resumed after suspension since 2005.
- Electronic trading commences at the NSE:
On September 11, 2006 the Nairobi Stock Exchange migrated from the hitherto Open Outcry system to the Automated Trading System (ATS), an electronic trading platform. The President commissioned the new technology on 25 October 2006.
The change is expected to double the value of shares traded each day on the bourse with enhanced integrity and efficiency. Investors are now able to access current information thus facilitating them to make informed investment decisions on timely basis.
On December 17, 2007, the NSE completed its migration from the open outcry trading floor method to an all encompassing Wide Area Network
Wide area network
A wide area network is a telecommunication network that covers a broad area . Business and government entities utilize WANs to relay data among employees, clients, buyers, and suppliers from various geographical locations...
(WAN) trading system which allows stockbrokers to trade from the comfort of their offices.
- Equity Bank listing:
Listing and official trading of Equity Bank shares on the NSE commenced on 7 August 2006; a day which saw the price move from Kes. 70 to Kes. 158 in a single price setting deal involving 1000 shares.
- ScanGroup Ltd. IPO:
On 17 July 2006, the initial public offer of Scangroup Limited shares kicked off what was to be a historical listing at the NSE. Scangroup, became the first marketing
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
services company in Africa to go public through an IPO. The advertising house, an intelligence-intensive outfit, offloaded 69 million company shares into the capital markets at an offer price of Kes 10.45 per share. The IPO was oversubscribed by 520% and official trading of the company’s shares on the NSE) commenced on the August 29, 2006.
The Scangroup share price rose by 39% on its first day of trading to close the day at Kes. 15 with 3, 056,000 shares exchanging hands.
- KenGen IPO:
In April 2006, the Government offloaded 659.51 million shares in Kenya Electric Generating Company (KenGen) through the capital markets. The IPO premiered at the NSE at a discounted price of Kes. 11.90 price before rallying to a high of Sh40, representing a massive fourfold jump. The success of the IPO is credited for spurring the current appetite and excitement for investing in Kenya.
On April 25, 2007, an intended secondary offer for the shares, in pursuance of the IPO's initial success, was abruptly postponed by former Finance Minister Amos Kimunya
Amos Kimunya
Amos Muhinga Kimunya is a Kenyan politician and a Member of Parliament for Kipipiri Constituency, currently serving as Minister of Trade. He was Minister of Finance from 2006 to July 2008, when he resigned due to the Grand Regency Hotel scandal...
attributing the move to the prevailing share price being very low and the bulk tariff conflict between Kengen and KPLC. http://www.timesnews.co.ke/20may07/insight/ins1.html
- CFCStanbic Bank rights issue:
On December 23, 2005, CFCStanbic Bank officially listed 12.0 million new shares, arising out of its successfully completed rights issue. The bank succeeded in raising the Kes. 744 million (U.S.$10 million) needed to align its capital base with Central Bank of Kenya risk management guidelines.
- Uchumi Supermarkets rights issue:
In October 2005, the retail chain, already facing serious financial challenges, received approval from the CMA for its shareholders to inject an extra Kes. 1.1 billion (U.S.$15 million) through a rights share issue.
In May 2007, a year after the near-collapse of the retail supermarket, attention shifted to renewed efforts toward the retail chain's tortuous recovery strategy. The company's receiver-managers, led by Mr Jonanthan Ciano, offered shareholders yet another chance to inject Sh800 million (U.S.$ 11.4 million) into the company under a new recapitalisation plan. Analysts then observed that were the plan to fail due to shareholder reluctance, the retail chain would have to find a new equity partner to fund its recovery.
- KCB rights issue:
The highly successful Kenya Commercial Bank
Kenya Commercial Bank
Kenya Commercial Bank is a financial services provider headquartered in Nairobi, Kenya. , it was among the three largest commercial banks in Kenya with assets of more than US$2.65 billion , and shareholders capital valued at US$486 million . The other two large Kenyan commercial banks are Barclays...
rights issue in September 2004, mobilized in excess of Kes. 2.3 billion (U.S.$31 million) needed for the bank's growth strategy. The rights offer for 50 million shares at a price of Kshs 49.00, was oversubscribed by 12.25%, necessitating a refund of Kes. 310 million (U.S.$4.1million) to applicants following shortage of untaken rights for allotment.
Other information
- Chief Executives of the CMA are contractually barred from directly owning any shares on the NSE and can only participate in bourse trading through new IPO issues (which come into the market without any prior bourse performance records). This serves to deflect any conflicts of interest.
- Ntalami, Francis MuthauraFrancis MuthauraFrancis Kirimi Muthaura is a prominent Kenyan civil servant. Muthaura is a close ally of President Mwai Kibaki. He is the Head of Civil Service and Secretary to the Cabinet....
, the current Head of Civil Service and Secretary to the Cabinet and David MwirariaDavid MwirariaDavid Mwiraria was the Minister for Environment and Natural Resources previously Finance Minister of Kenya until December 2007 when Kenya held its General Elections...
, former Minister of Finance, were high-school mates from Nkubu Secondary SchoolNkubu Secondary SchoolNkubu is a town located in Eastern Province of Kenya, 275 kilometers from Nairobi on the Nairobi-Meru road. It is the headquarters of the Imenti South District and falls in one of the most fertile and best watered parts of Africa, with tea, coffee and dairy farming as the main economic activities...
, MeruMeru, Kenya-Transport:The City of Meru is linked to Nairobi by a paved road, whether from the south around the east side of Mount Kenya, via Embu, or from the northwest around the west and north side of Mount Kenya, via Nanyuki and Timau....
.
Accolades
- Kenya's secondary bond market voted among the best in Africa: A report released by the International Monetary FundInternational Monetary FundThe International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF), in April 2007, ranked Kenya's secondary bond marketBond marketThe bond market is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the Secondary market, usually in the form of bonds. The primary goal of the bond market is to provide a mechanism for long term funding of public and...
as among the most vibrant in Africa, coming only third to South AfricaSouth AfricaThe Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
and MauritiusMauritiusMauritius , officially the Republic of Mauritius is an island nation off the southeast coast of the African continent in the southwest Indian Ocean, about east of Madagascar...
. The World Regional Economic Survey for April 2007 reports that, "Kenya's lengthening maturities which has allowed better pricing of debt instruments, puts it among the few countries in Africa with a vibrant debt market."
- The overwhelming success of the KenGen IPO was widely commended for generating a lot of awareness in investments among ordinary Kenyans of all ages, professions and income levels. The landmark IPO led to a massive interest in opening stock brokerage accounts and investing in Kenya. According to the Central Depository and Settlement Corporation (CDSC), the number of people with CDS accounts increased significantly and as at the end of June 2007 stood at over 750,000 accounts up from 78,300 in December 2005; a noteworthy tenfold increase in only one-and-a-half years.
- Many have also commended Ntalami for his resolve in rejecting plans to use a bookbuilding approach to allocate the KenGen shares. The initial plan is said to have been abandoned after it appeared to be biased against the small investor.
- Under Ntalami's watch at the healm, the NSE 20 Share Index posted a historic mark, surpassing its previous all-time high of 5,030 points, hit on February 18, 1994. As at close of trading on November 10, 2006 it stood at 5654.46 points. The NSE index has delivered an unprecedented growth in excess of over 300% over the last two and a half years.
- For over a decade since March 1996, the NSE had only listed three new companies, namely Kenya AirwaysKenya AirwaysKenya Airways Ltd., more commonly known as Kenya Airways, is the flag carrier and largest airline of Kenya. The company was founded in 1977, after the dissolution of East African Airways. The carrier's head office is located in Embakasi, Nairobi, with its main base at Jomo Kenyatta International...
, MumiasMumiasMumias is a town in the Western Province of Kenya. The town has an urban population of 32.965 Mumias is the center of the Mumias Division of the Butere/Mumias District. The town is linked by road to Kakamega , Busia , Bungoma , Butere . The village of Buchinga is located between Mumias and...
and ICID-I. In under four years of the former Chief Executive's tenure, the bourse witnessed the successful launch of six IPOs, namely KenGen, Scangroup, EvereadyEvereadyEveready or Ever Ready may refer to:In companies and organizations:* Eveready Battery Company, a U.S. battery manufacturer which became Energizer Holdings...
East Africa (listed with an oversubscription of over 800%), Mumias SugarMumias SugarMumias Sugar is a sugar company in Kenya. It has headquarters in Nairobi and operations in Mumias. Its name is abbreviated to MSC. Mumias is listed on the Nairobi Stock Exchange....
and AccessKenya Group (listed with an oversubscription of 363%) and recently Kenya Re (see photo (right)); including the oversubscription of five Rights Issues, namely KCB Bank, CFCStanbic Bank, Uchumi Supermarkets, Diamond Trust and Olympia Capital. Ntalami left office just prior to the landmark listing of SafaricomSafaricomSafaricom, Ltd is a leading mobile network operator in Kenya. It was formed in 1997 as a fully owned subsidiary of Telkom Kenya. In May 2000, Vodafone group Plc of the United Kingdom, the world's largest telecommunication company, acquired a 40% stake and management responsibility for the...
, the leading mobile telecommunications service provider in the country.
- The Year of the IPO: 2006 was hailed as "The Year of the IPO" by Madabhushi Soundarajan, former Managing Director, CFCStanbic Bank and CFC Financial Services. "You can call 2006 the Year of the Initial Public Offer where many Kenyans saw the benefit of the stock market to make wealth" he said, through a supplement/advertising feature released in the country's leading newspaper, Daily Nation on December 13, 2006. CFCStanbic Bank is part of the CFCStanbic Group whose Total Assets then stood at over KShs 16 billion. In line with this, James Murigu, the former Managing Director of Suntra Investment Bank, has commended the CMA's pace in processing of new applications for bourse listings.
- The CMA has been lauded by the private sector and newly listed companies for reviving confidence in Kenya's capital markets which has in turn translated into active participation from both manufacturing and service sectors. In August 2007, Renaissance Capital - a major multinational investment bank, was granted license to operate in Kenya. RenCap commended the regulator for the speedy processing of its application which showed its commitment to deepening the capital markets in Kenya.
- Investor Education and Awareness Programmes: On January 30, 2006 the CMA hosted a major Workshop at the Grand Regency Hotel, Nairobi, inviting leading media houses, journalists and industry players, both local and international, to train them on the tenets of good capital markets reporting. The CMA also participated in the Mombasa and Nairobi Agricultural Society of Kenya (ASK) shows in August and October 2006 respectively, where the Authority won an award for the Best Financial Institutions stand at the Mombasa ASK. CMA has in the past hosted a number of seminars including one for State Corporations. Also, in May 2007, the market regulator begun supplement releases to educate the public on the capital markets.
Criticism
- Ntalami, a former stockbroker, and Jimnah Mbaru (current NSE Chairman and stockbroker), have been criticised in the past of being inappropriate to self-regulate the capital markets because their affiliations to capital markets could create potential conflicts of interest. The NSE (and its top management) have in the past come under fire for being an 'exclusive club' tightly controlled by an eighteen (18) member team of existing market brokers and investment banks. In fact, in a recent attempt to debunk this perception, it was reported on August 3, 2007 that the NSE would put up for sale a seat on its executive board at an estimated reserve price of Ksh 300 million (U.S.$4.5million). The coveted seat was clinched on August 21, 2007 by Renaissance Capital.
- Corporate bonds: There have been few corporate bonds approved since the beginning of 2006. The domestic bond market is widely viewed as under-developed, an observation made by Ntalami. A report released in April 2007 by the International Monetary FundInternational Monetary FundThe International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
ranked Kenya's secondary bond marketBond marketThe bond market is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the Secondary market, usually in the form of bonds. The primary goal of the bond market is to provide a mechanism for long term funding of public and...
as being among the best in Africa, coming third only to South AfricaSouth AfricaThe Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
and MauritiusMauritiusMauritius , officially the Republic of Mauritius is an island nation off the southeast coast of the African continent in the southwest Indian Ocean, about east of Madagascar...
. The outstanding value of corporate bonds as at the end of October 2006 rose to Kes. 8.6 billion ($123 million) following the issue of the second trancheTrancheIn structured finance, a tranche is one of a number of related securities offered as part of the same transaction. The word tranche is French for slice, section, series, or portion, and is cognate to English trench . In the financial sense of the word, each bond is a different slice of the deal's...
of Shelter Afrique in October.
- Media shy: Unlike his contemporaries such as NSE chairman Jimnah Mbaru, Suntra Investment Bank's James Murigu and Standard Investment Bank's James Wangunyu, who do not mind the public limelight, Ntalami has by far and large curved out a quiet demeanor. There have been calls for the Chief Executive to be more visible and for the CMA to create a better communications/PR mechanism. Reacting to this, the CMA recently made efforts to bolster its human resource capacity. On 10 July 2007, it moved to recruit new personnel for various departments in financial, public relations, legal, research, IT and compliance. The recruitment is to be done through a human resources placement firm Osano and & Associates.
Quotations
"We reckon that there are at least a dozen ICT companies in Kenya that are eligible for quotation on the Main Investment Market Segment of this exchange.”- - At the inaugural IPO launch of corporate web firm, AccessKenya Group
“The board of the Authority has reviewed the award and considers that it raises significant legal and policy issues with far reaching implications on the long term operations of the capital markets in Kenya.”
- - Statement made in CMA's appeal against a tribunal ruling okaying the BOC Gases takeover of Carbacid
“Regulation only mitigates but does not guarantee against islotated instances of failure by licencees.”
- - In response to insolvency of suspended NSE stock-broker, Francis Thuo & Partners
“...invest with your eyes open!”
- -following the inaugural launch of ScanGroup IPO at the bourse. Nairobi, Kenya.
“The right to invest or not to invest cannot be taken away from him!”
- - in reference to an investor's prerogative to choose whether to invest (or not) in ScanGroup IPO share offer
Succession table at CMA Kenya
Previous Chief Executives of the CMA (Kenya), include (a) William Chelashaw, who served from 1992 until 1997 and (b) Paul K. Melly, who served from 1998 until 2002.External links
- Official site of the Capital Markets Authority, Kenya
- NSE’s stellar growth attracts Wall Street
- Wall Street calls on NSE brokers over Safaricom
- Russian investment bank spreads wing to Africa
- Economic boom ups business confidence
- Kenya bourse moves to electronic trading
- NSE Share Index hits historic high
- NSE gets fifth Investment Sector
- BOC's Carbacid takeover blocked by CMA appeal
- Kenya: Investors Look to Kampala for Opportunities
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