Kenya is launching a massive initial public offering for its state-run pipeline company. This move aims to revive the country's stock market after more than ten years without a major government-backed equity sale. Bloomberg reports the country plans to raise a record 106.3 billion shillings, which equals about $824.1 million.
Details of the Landmark Share Sale
President William Ruto's government will sell 11.8 billion shares in Kenya Pipeline Company. This represents a 65% stake in the firm. The offer price is set at KES 9 per share, roughly $0.070. This sale values the entire company at 163.6 billion shillings or $1.27 billion.
Once listed, Kenya Pipeline Company will become the fifth-largest company on the Nairobi Securities Exchange. The IPO opened for subscription on Monday, January 19th. It will close on February 19th. This public offering positions itself as the biggest since Safaricom Plc raised 50 billion shillings back in 2008.
Why This IPO Matters for Kenya
This marks Kenya's first IPO since 2015. The government needs money for infrastructure projects. Kenya faces heavy debt burdens, limiting its capacity to take on more loans. Official data shows the country's debt rose to a record 72% of gross domestic product in 2023.
President Ruto has stated Kenya requires at least 5 trillion shillings to transform into a developed economy. The government now looks to raise funds through privatisation and securitisation of state-owned assets. Dozens of other state companies line up for similar moves, including National Oil Corp and New Kenya Co-operative Creameries Ltd.
Kenya Pipeline Company's Strategic Role
Kenya Pipeline Company plays a critical role in the nation's energy system. It operates an extensive network of pipelines spanning 1,342 kilometres or 834 miles. These pipelines transport petroleum products from the Port of Mombasa to major consumption centres across Kenya.
The network also extends into the wider East African region. The company enjoys a near-monopoly in fuel transportation within Kenya. This position underpins national energy security and supports fuel trade with neighbouring countries.
According to the company's website, its system can transport about 14 billion litres of petroleum products annually. That equals roughly 3.7 billion gallons. The company reported strong financial performance, with pre-tax profit gaining 65% in the financial year through June. Profits reached 16.5 billion shillings.
Market Conditions and Expert Outlook
The IPO arrives as Kenya's stock market shows strong performance. The benchmark stock index jumped 51% in local-currency terms last year. This marks its biggest rise since the measure's creation in 2008.
Frank Mwiti, Chief Executive Officer of the Nairobi Securities Exchange, called this IPO an important milestone. He told Bloomberg it signals renewed confidence in capital markets financing Kenya's economic transformation.
Belgrad Kenne, who leads the sale at Faida Investment Bank, notes high investor interest. Experts anticipate an oversubscription. Kenne points to favourable macroeconomic conditions in Kenya. Fixed-income yields have dropped significantly, prompting portfolio managers to seek higher returns on the stock exchange.
Kenne told Bloomberg the NSE has been performing exceptionally well, creating ideal timing for this offering. The government hopes this landmark sale will kickstart a new era for Kenya's capital markets and provide crucial funding for national development.
