Sasini Bond Starts Trade At NSE

Sasini Limited's Sh600 million bond started trading at the Nairobi Stock Exchange making it the first listed bond in the market by an agricultural-based company.

This is the second corporate bond to come to the market in the last two weeks after Barclays Bank's Sh5 billion bond. Investors, mostly institutional, over-subscribed the Sh600 million bond within two weeks of its launch.

Awash with capital

NSE chairman Jimnah Mbaru said that the successful listing of the bond strengthens the market position to accommodate well-run local companies as alternative investments.

"It highlights the accessibility of Kenya's capital markets to public and private firms, and the flexibility they offer in terms of the type of long term capital a firm can raise," he said at NSE trading floor yesterday. Capital Markets Authority chief executive Edward Ntalami said the Kenyan financial system is awash with capital "looking for home."

The pension schemes alone are holding more than Sh240 billion in long term resources, which is growing at 10 per cent annually.

"The issue now is not the availability of funds but borrowers coming forward to take advantage of these huge resources," Mr Ntalami said. He said it is cheaper to raise long term capital through the securities market than it is through the banking system. The pricing of Sasini bond is at 11.75 per cent. "At 11.75 per cent you will be hard put to borrow from banks," Mr Ntalami said.

Among other things, the money will go into expansion of Sasini tea packing plant in Mombasa and enlargement of its coffee mill in Kiambu.

The NSE-listed Sasini mainly deals in coffee and tea although it also owns dairy and horticulture farms.

Control chain

The company's ultimate objective is to control the entire chain of production from the actual growing of its tea and coffee to processing, milling, roasting, blending, trading, packaging and selling to final consumers and exports.

Last month, Sasini opened a coffee house in Nairobi under the brand name Savanna, which it says would complete the value addition chain.

After establishing three more Savanna outlets in Nairobi, the company plans to one in the United Arab Emirates.

With Sh600 million investment in various value addition projects, the company forecasts its profit before tax to rise from Sh108 million next year to Sh579 million by 2012.