Business
Uganda electricity distributor, Umeme, launches regional IPO
Umeme hopes that by listing at the Nairobi Securities Exchange, which is East Africa’s largest securities exchange, it shares will be more actively traded. Kenyans are expected to take part in the offer following their appetite to take part in the other offers in the region.
In 2006, Kenyans actively participated in the Stanbic (Uganda) bank IPO. But one of the biggest challenges for the Kenyans has been trading in the stock at the Uganda Securities Exchange, where the buyers and sellers are not as many as at the Nairobi Securities Exchange.
However, their interest in some Tanzanian IPOs has been restricted by the capital market regulations in the country which limit the number of foreign investors.
With Umeme cross listing at the Nairobi Securities Exchange, investors will also have the option of picking between the Ugandan electricity distributor and Kenya Power.
The shares of electricity distributors are considered a good bet by many analysts because of their ability to withstand tough economic climates by passing on their increased costs of operations to consumers.
“A lot of utilities have pricing power because they are allowed to set the prices of their services,” said Johnson Nderi, a research analyst with Suntra Investment Bank.
He said the listing of Umeme at the Nairobi Securities Exchange will “be very interesting” with the option of investors to pick between Kenya Power and Umeme.
