Cytonn shelves listing plan, cites depressed stock market

Alternative investments firm Cytonn has put off its public listing plan citing the continued depressed performance of company stocks.

The firm which had previously hinted at a late 2019 listing on the local or global market is now set to stick to its largely private capital raising initiatives as it awaits the resurgence of the domestic equities market.

“We’ve decided to pull back given the equities market is not that vibrant. From our tests, the market is not willing to pay what we would have liked,” Cytonn Investments Chief Executive Officer Edwin Dande told Citizen Digital.

Having found footing from direct borrowing, the company is keen on leveraging debt financing to meet capital requirements as it remains at ease of tapping funds expressly from individuals and institutional investors.

“It has been relatively easier to tap for funds directly as opposed to going through banking sector intermediaries,” Mr. Dande added.

Cytonn has however been on the move to diversify its capital structure having recently tapped onto a Ksh.650 million credit line from the State Bank of Mauritius (SBM) to shove up financing for the completion of its Ksh.3.5 billion residential development in Ruaka.

Further, the firm which manages assets worth over Ksh.80 billion has sort to list its first real estate investment trust (REIT) issue worth Ksh.2 billion and awaits requisite approval from the Capital Markets Authority (CMA).

Cytonn’s capital raising initiatives have been flanked by its Finland based strategic partner-the Taaleri financial group which resolved to take up a 20 percent stake in Cytonn upon the company’s prospective listing.

Cytonn hideaway from the Nairobi Securities Exchange (NSE) is set to extend the listings droughts for the bourse with other 2019 potential listings by the Tusker Mattresses Limited (Tuskys) and equipment leasing firm Vaell sublimating into the NSE incubator program.

The NSE has been without an Initial Public Offer (IPO) since the trading firm’s own listing in 2014 with the only other listings being in the lack-lustre Growth and Enterprise Segment (GEMS).

The depressed activity at the NSE is partly as a result of the lowered investor sentiment in economies in the emerging and developing markets (EDMs) as mirrored in the pervasive foreign investor outflows from listed equities stocks.

Kenya’s equities market is currently trading at a price to earnings ratio (P/E) of 11.8 times or an equivalent 11.2 percent below the historical average of 13.3 times with a dividend yield slightly above the historical average of 3.9 percent.

The under valuation of the market presents potential for growth but analysts projects potential listings have stayed off the market in fear of taking a battering from the depressed stock worthiness.