Transactional advisers and other professionals facilitating the listing of Family Bank shares are in line for a Sh77.2 million payday, making them the latest beneficiaries of renewed deal-making activity in Kenya’s capital markets.
Providers of marketing and advertising services will take the bulk of the budget, with the bank setting aside Sh50 million to publicise its listing by introduction.
The transaction adviser, Standard Investment Bank Limited, is set to earn Sh8.5 million.
The reporting accountant, PricewaterhouseCoopers, will receive Sh7 million, while legal adviser Mboya Wangong’u & Waiyaki Advocates will be paid Sh5.25 million.
Listing cost
The professional fees amount to 0.258 percent of the transaction, which will see 1.66 billion Family Bank shares begin trading on the Nairobi Securities Exchange (NSE) on Tuesday.
The Capital Markets Authority (CMA) received the maximum Sh5 million issuance approval fee.
Companies pay the regulator a fee equivalent to 0.25 percent of the transaction value, subject to a cap of Sh5 million. Without the cap, CMA would have received Sh74.8 million.
A listing by introduction means the bank is not raising new capital. Instead, the listing will provide liquidity for existing shareholders and allow new investors to acquire shares in the lender.
Family Bank shares have traded on the less liquid and less transparent over-the-counter (OTC) market since 2006.
Trading over the counter offers limited liquidity because shareholders must work through brokers to identify matching buyers and negotiate transaction prices.
Listing on the NSE will earn the bourse Sh1.5 million in fees, which are charged at 0.06 percent of a company’s market capitalisation and capped at Sh1.5 million. The minimum fee is Sh200,000.
Deal bonanza
Stockbrokers, lawyers, accountants and public relations firms involved in arranging corporate transactions typically earn substantial fees for their services.
Recent months have been particularly lucrative as Kenya’s capital market, which had remained subdued for more than a decade, recorded its first initial public offering (IPO) in years, a resurgence in corporate bond issuances and new listings.
The Kenya Pipeline Company IPO in March proved the most lucrative transaction, with advisers and intermediaries sharing Sh2.99 billion in professional fees and expenses.
Faida Investment Bank, for instance, earned a Sh1.06 billion bonus following the full subscription of the IPO.
These advisory and placement costs were deducted from the government’s gross proceeds of Sh106.3 billion.
Professional firms engaged in the restricted public offer of the Talanta Sports City Stadium-backed infrastructure bond also shared Sh646 million in fees.
Liaison Financial Services Limited, which acted as the bond arranger, received the largest share at Sh259.8 million.
Other capital-raising transactions that generated sizeable professional fees include bond issues by Safaricom, East African Breweries Limited and I&M Bank Limited.
