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Capital Markets

Investors prepare for largest ever Kenyan IPO

Part of an increasingly active market attracting foreign investors.

Kenya is gearing up for the country's largest ever IPO, scheduled for November, when the government plans to sell a 30% stake in Kenya Electricity Generating Company (KenGen).

The sale of the stake should raise about $120 million for the government. "This is a huge public offering for Kenya," says Andre de Simon, executive director of Kenyan investment house Kestrel Capital, which has been appointed co-sponsoring broker for institutional investors on the issue.

Kenya's previous largest IPO was an approximately $30 million-equivalent listing in 1996 of Kenya Airways. Following that listing, Dutch airline KLM took a 26% stake in the company.

The size of the offering makes it likely that international investors will play a significant role in the IPO, alongside domestic retail and institutional players. On the secondary market, foreign players generally account for about 10% of trading volume. "Kenya has quite a vibrant retail market, with some very large private investors," says de Simon.

Although a rush of IPOs is not expected, Kenyan investors are hoping that Safaricom – the mobile phone operator jointly owned by Telkom Kenya and Vodafone – will be brought to the market in the near future.

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