The Kenyan government is considering listing the Kenya Pipeline Company (KPC) on the Nairobi Securities Exchange (NSE) through an Initial Public Offering (IPO), a move that would mark the end of a ten-year listing drought at the bourse. The last IPO at the NSE was in 2015 when Stanlib Investments issued the first-ever Real Estate Investment Trust (Fahari-Ireit), which managed to raise Ksh3.6 billion, significantly below its target of Ksh12.5 billion, translating to a 28.8 percent success rate.
Lawrence Kibet, the Director General of Public Investments and Portfolio Management, confirmed the government’s intention to list KPC, stating that the move aligns with the broader agenda of privatizing state-owned enterprises to enhance efficiency and attract investment. The proposal comes as the Government-Owned Enterprises (GOE) Bill 2024, which provides a framework for restructuring and privatizing government entities, has been approved by the Cabinet and is currently under review by the Attorney General.
The potential listing of KPC on the NSE is expected to inject fresh liquidity into the market, which has struggled with a prolonged IPO drought. The last decade has seen limited activity in terms of new public listings, raising concerns about the vibrancy and attractiveness of Kenya’s stock market. By offering shares in KPC to the public, the government aims to improve corporate governance at the parastatal while mobilizing funds for infrastructure development and expansion projects.
The move also comes at a time when the government is keen on reforming the energy sector. Kibet noted that the dissolution of the Kenya Petroleum Refineries Limited (KPRL) had taken unnecessarily long, and efforts are underway to ensure a smooth transition within the current financial year. The privatization of KPC is seen as a strategic step in making the company more competitive and financially sustainable.
Market analysts believe that the listing of KPC could reinvigorate investor confidence in the NSE, encouraging other state-owned enterprises and private firms to consider public listings. The NSE has faced challenges in attracting new issuers, and the success of this IPO could set a positive precedent for future privatizations.
If approved, KPC’s listing will provide investors with an opportunity to own a stake in one of the country’s most critical energy infrastructure companies. It remains to be seen how the market will react, but stakeholders anticipate that the move will boost capital markets and contribute to Kenya’s economic growth.
