Juja-based exporter of avocados and herbs Karakuta Fresh Produce has sought regulatory approval to list on the Nairobi Securities Exchange (NSE) in a move that will expand the agricultural segment of the market.
In its application to the NSE and the Capital Markets Authority (CMA), Karakuta plans to list by introduction by the end of this year. This means it will not be raising new capital and will simply list existing shares for potential sale to other investors.
Companies can also go public through an initial public offering (IPO) where shares are sold to raise funds shortly before listing.
“The listing will provide shareholders with a transparent platform for price discovery in the market and trading of its shares,” Karakuta’s founder and chief executive Grace Ngugi, told Business Daily.
“Listing on the NSE will enable the company to enhance its corporate governance, unlock value and give it access to deep capital markets for potential capital raising in future.”
Once Karakuta lists, the NSE will gain an additional member in the agricultural segment, which currently has six companies –Eaagads, Kakuzi, Kapchorua, Limuru Tea, Sasini and Williamson Tea Kenya.
Karakuta was established in 2018 in the Karakuta area of Kiambu County and sources Hass and Fuerte avocados from 3,000 farmers across Kenya, Uganda and Tanzania. Besides avocados, Karakuta also exports herbs including basil, oregano, thyme, tarragon, mint, rosemary, sage, coriander and chives.
The company has customers in the European Union, the United Arab Emirates, Malaysia and India. It is also targeting the promising China market. The company is expected to publish its financial information and other disclosures before listing.
Karakuta currently has only two shareholders, meaning that it will need to conduct an ownership restructuring to comply with listing regulations that require a minimum of seven shareholders and a minimum paid-up capital of Sh10 million for firms eyeing the bourse’s SME Market Segment.
Grace Muthoni Ngugi currently owns 80 percent of Karakuta while Lawrence Kibe Karanja holds the remaining 20 percent, according to company registration records seen by Business Daily.
Other listing requirements published by the NSE include a lock-in period of 24 months for controlling shareholders, a minimum volume of shares equivalent to a 10 percent stake available for trading by the public and total assets of Sh100 million.
Some of these conditions can be waived at the discretion of the CMA. Karakuta will become the latest firm to list by introduction after Family Bank which went public in June, floating 1.7 billion ordinary shares at an introductory price of Sh18 each.
Other firms that have gone public by introduction at the NSE include Homeboyz Entertainment Plc in 2020 and Flame Tree Group Holdings Ltd in 2014.
According to the top leadership of Karakuta, going public at this time is designed, to a large extent, to ensure the company unlocks price discovery through open trading in the NSE which has been on a bull run in the past few years.
“Listing on the NSE is the natural next step. It gives us the governance and transparency that public markets demand and positions Karukuta to draw on deeper capital as we scale production and expand into new markets,” Ms Ngungi said.
Karakuta’s listing will be midwifed by Synesis Capital as the lead transaction advisor, MWC Legal as the transaction’s legal advisor and Bakertilly as the reporting accountants.
