Quickmart investors gain Sh5.6bn on first day of trading

Shareholders of retail chain Quickmart gained Sh5.6 billion in paper wealth on the first day of trading after listing at the Nairobi Securities Exchange on Thursday. The stock closed at an average price of Sh8.90 a unit on 9.7 million shares traded, resulting in a traded value of Sh86.2 million. This comes after the company's initial public offering, which closed on November 6, was oversubscribed by Sh3.4 billion.

Quickmart listed four billion shares on the Nairobi bourse, following the oversubscribed IPO that valued the company at Sh30 billion. At the closing price of Sh8.90 a share, the company was valued higher at Sh35.6 billion, making it the 19th largest listed firm by market capitalisation. The company's day-one gain of 19 percent is higher than the two percent gain recorded by Kenya Pipeline Company when it entered the market on March 10.

The Quickmart listing was seen as a test for the stock market as an exit option for private equity investors like the retailer’s biggest shareholder, Adenia Partners. Family-owned firms were also keenly watching the sale to see whether the stock market remains a viable option for raising capital, based on the appetite for the shares among the investing public. Quickmart’s founders and private equity fund Adenia Partners put up two billion shares for sale in the IPO —half of their holdings— netting them Sh15 billion from the transaction.

The IPO attracted 18,492 applications for 2.45 billion shares, representing an oversubscription of 22.7 percent that underlined the demand for the offer. The shares were underwritten by global funds led by the World Bank’s International Finance Corporation, which has taken a stake of 6.49 percent in the retailer. Other anchor investors include UK government-backed fund MOBILIST, US-based investment firm 337 Frontier, and UK fund manager RWC LLC.

Quickmart’s original shareholders were the biggest winners in the share price gain, courtesy of their two billion shares held collectively through an investment vehicle known as Sokoni Retail Kenya Limited. These shareholders include Adenia, the retailer’s chief executive officer Peter Kang’iri, and the founders of Quickmart and Tumaini supermarkets. Adenia acquired a 55 percent majority equity stake in Tumaini Supermarket in 2018 and a 51 percent stake in Quickmart in 2019.

The Mauritius-based PE fund and its co-investors in its fund have an effective stake of 25.4 percent or 1.02 billion shares in Quickmart at listing, with the value of its holding rising by Sh1.42 billion to Sh9.04 billion on Thursday. Other Kenyan and East African Community investors who participated in the IPO were allocated a total of 1.04 billion shares, whose value rose by Sh1.46 billion to Sh9.3 billion.

Foreign investors also booked a gain of Sh329.3 million on their 235.2 million shares, which were valued at Sh2.1 billion at close of trading on Thursday. According to Wesley Manambo, a senior research associate at Standard Investment Bank, the demand for Quickmart's shares is expected to sustain the price in the near term, especially from foreign investors whose demand was unmet during the IPO.

Key points

• Quickmart's shares surged 19% on its first day of trading at the Nairobi Securities Exchange.
• The company's listing was seen as a test for the stock market as an exit option for private equity investors.
• The IPO was oversubscribed by Sh3.4 billion, with 18,492 applications for 2.45 billion shares.