Fear of losing ownership keeps family firms away from NSE
What you need to know:
- Most small firms favour informal and short-term bank finance over other alternatives such as through Gems, private equity investors or development finance institutions.
- During the roundtable, a report commissioned by NSE and CMA on review of Gems and increasing access to Kenya’s capital market by SMEs was tabled. Most small firms favour informal and short-term bank finance over other alternatives such as through Gems, private equity investors or development finance institutions.
Family businesses are hesitant to list on the Nairobi Securities Exchange for fear of ceding control of their companies to outsiders.
The NSE chief executive, Mr Geoffrey Odundo, said the notion has seen listing on the exchange fall below target.
“Family-owned businesses, in most cases, have failed to understand the importance of listing on the securities exchange and that is why you find most of them reluctant over fears such as diluting business ownership, being in the focus of regulators or that it is tedious, which is not the case.
“We are in constant consultations with the Capital Markets Authority to simplify listing procedures and see how to increase listing in NSE this year,” said Mr Odundo last week.
He spoke at the second NSE leadership and diversity dialogue series chairpersons’ roundtable attended by heads of public listed companies. Former South African First Lady Graça Machel attended.
In 2013, the government, in its capital market master plan, established the Growth Emerging Market Segment (Gems) on the NSE, targeting small- and medium-sized enterprises.
Out of the expected three to four listings on the segment per year, only four have done so over the past two years. They are Home Afrika Ltd, Flame Tree Group, Kurwitu Ventures Ltd and Atlas Development.
BANK FINANCE
During the roundtable, a report commissioned by NSE and CMA on review of Gems and increasing access to Kenya’s capital market by SMEs was tabled.
Most small firms favour informal and short-term bank finance over other alternatives such as through Gems, private equity investors or development finance institutions.
“Though the benefits of capital markets are not well understood by SMEs, companies interviewed indicated that a key reason they would (and did) access financial markets - and a Gems listing in particular - was to raise the profile of their business over and above raising growth capital,” said the report.
