Why BK Group is listing with Nairobi Securities Exchange

BK Group PLC shareholders approved plans to cross list on the Nairobi Securities Exchange in an Annual General Meeting held in Kigali on Friday. Cross listing of shares is when a firm lists its equity shares on one or more foreign stock exchange in addition to its domestic exchange. This means that investors interested in acquiring the lender’s shares have the options of trading in Kigali or in Nairobi. Trading in the Nairobi Securities Exchange – the biggest in the region – will see BK Group have a larger access to investors from the international market. International investors previously faced compliance issues as there are no international custodians as there are in Nairobi Securities Exchange. The Nairobi Securities Exchange presents the advantage of custodians such as Barclays and HSBC, allowing international investors trade local shares. The Group will also benefit from increased liquidity listing in NSE as it has a higher turnover compared to the Rwanda Stock Exchange. The Rwanda Stock Exchange has a daily turnover of between $15,000 and $20,000 while Nairobi Securities exchange has a turnover of about $7m a day. “One of the reasons our stock prices remain level is because of liquidity. I truly believe that once we have a greater access to liquidity and custodial arrangements and more sophisticated investments, the share price is likely to rise,” said Marc Holtzman, the Chairman, Board of Directors of BK Group PLC. The Group, which has four subsidiaries, is banking on the opportunities in the various sectors to attract investors at the NSE. For instance, the low insurance penetration in Rwanda, at about 3 per cent, could be viewed by a large section of investors as a virgin market. Rwanda’s relatively low levels of penetration of formal banking could also be viewed as an investment opportunity by international investors. The process is expected to increase between $60m-$70m with a section of it earmarked for continued digitisation of the Group’s operations. Existing shareholders will have the first rights to invest before the rest of the market can access the shares. “We will issue rights for our existing shareholders, the rights that will not be taken here will be taken to Nairobi,” Bank of Kigali chief executive Diane Karusisi said. “We are planning to use the money to digitise the bank, including internal process as well as reviewing our technology architecture. A big portion of the money that we are raising will go into that,” she added. The rest of the proceeds will go into other subsidiaries which include, BK Capital, BK Tech house and BK insurance. The bank says that between $10m and $20m of the raised capital will be used up in the digitalisation of the Bank of Kigali. The bank is working on listing by October this year after complying with all regulatory requirements and procedures. “We already have a couple of Kenyan companies listed in Rwanda; it will be easy for us to get the regulatory approvals. We are already compliant with all regulations of Capital Markets in Kenya. We now only require approval,” Karusisi said. The number of shares to be issued will depend on the rights issue price but the move could move shareholder equity up to $200million. Meanwhile, yesterday’s AGM appointed Alline Kabbatende, a tech expert, as a new member of the board directors. With ICT fast shaping and influencing the financial sector, Kabbatende will help steer the Group in regards to technological advancements. Kabbatende, formerly the Chief Operating Officer of Rwanda Online, an e-government service provider, currently works with the World Economic Forum. BK Group registered a net profit of Rwf23.3 billion last year, an increase of 12.5 per cent compared to the previous year. The full year performance indicates that the bank’s profit before tax also grew considerably by Rwf4.2 billion (14 per cent) to Rwf34.2 billion from Rwf30 billion recorded in the year 2016. editorial@newtimes.co.rw

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Why BK Group is listing with Nairobi Securities Exchange