This archive report was first published on 28 November 2019.
Kenya's alternative investments firm Cytonn has shelved its public listing plan, citing the continued depressed performance of company stocks. The firm had previously hinted at a late 2019 listing on the local or global market.
According to Cytonn Investments Chief Executive Officer Edwin Dande, the firm has decided to pull back given the equities market is not vibrant. 'We've decided to pull back given the equities market is not that vibrant. From our tests, the market is not willing to pay what we would have liked,' Dande told Citizen Digital on November 28, 2019.
Despite the setback, Cytonn has been on the move to diversify its capital structure. The firm recently tapped onto a Ksh.650 million credit line from the State Bank of Mauritius (SBM) to shove up financing for the completion of its Ksh.3.5 billion residential development in Ruaka.
Cytonn has also sought to list its first real estate investment trust (REIT) issue worth Ksh.2 billion and awaits requisite approval from the Capital Markets Authority (CMA). The firm's capital raising initiatives have been flanked by its Finland-based strategic partner, the Taaleri financial group, which resolved to take up a 20 percent stake in Cytonn upon the company's prospective listing.
The NSE has been without an Initial Public Offer (IPO) since the trading firm's own listing in 2014, with the only other listings being in the lack-lustre Growth and Enterprise Segment (GEMS). The depressed activity at the NSE is partly due to the lowered investor sentiment in economies in the emerging and developing markets (EDMs) as mirrored in the pervasive foreign investor outflows from listed equities stocks.
The under-valuation of the market presents potential for growth, but analysts project potential listings have stayed off the market in fear of taking a battering from the depressed stock worthiness. Kenya's equities market is currently trading at a price to earnings ratio (P/E) of 11.8 times or an equivalent 11.2 percent below the historical average of 13.3 times with a dividend yield slightly above the historical average of 3.9 percent.
