Gov't to privatise successful State corporations in bid to spur NSE listings

The government will begin privatising well-performing State corporations in an effort to encourage listings on the Nairobi Securities Exchange, President William Ruto has announced.

President Ruto, who spoke during the bell-ringing ceremony to mark the launch of the enhanced NSE Market Place on Tuesday said government-owned enterprises whose divestment is behind time will be sold off to private investors.

"My administration will revitalise the capital markets by privatisation of State-owned enterprises, where divestiture is overdue and strategic," said the president.

In investment, a divestiture is the partial or full disposal of a business unit through sale, exchange, closure, or bankruptcy, and often results from a management decision.

This might be because the unit is not part of a company's core competency, or it is deemed to be redundant after a merger or acquisition, or if the disposal of a unit increases the sale value of the firm.

A court order requiring the sale of a business unit to improve market competition might also result into divestiture.

At the same time, the President disclosed that his administration will introduce domestic bonds, also referred to as dollar-denominated bonds, to spur listings on the national stock market.

"I have asked the ministry concerned that between five and ten public enterprises that are mature should be listed in the next 12 months. I expect that the private sector will also work with the capital markets so that we can also have companies from the private sector listing in the Nairobi Stock Exchange," he said.

"My government is ready to work with companies that want to list in the stock exchange to overcome dome of the challenges that you may have that are denying you the opportunity to do so," added Ruto.

Domestic bonds are issued by borrowers resident in the country of issue, denominated in their local currency and regulated by the local authorities.

Governments and government agencies form a majority of borrowers in the domestic markets, alongside some corporate entities.

Earlier during the ceremony, Ruto invited private companies reluctant to list in the NSE because of "tax issues that may arise" if they disclose their financial information.

"The government is willing to work with you so that we can remove those impediments. We are ready to forgive some sins, let me put it that way, so that we can all move together," he said.