Chief Guest, Cabinet Secretary, Ministry of Land, Housing and Urban Development, Prof. Jacob Kaimenyi
Dr. Philip Goodwin, Chairman, Fusion Capital Limited
Mr. Luke Kinoti, Group Chief Executive, Fusion Capital Limited
Member of the Board and Management of Fusion Capital Limited present,
Invited Guests, Ladies and Gentlemen:
All protocols observed
1. Today is the culmination of a truly historic journey. The launch of the first Development REIT in Kenya is a
significant milestone in the delivery of the 10 Year Capital Markets Master Plan and the Vision 2030. The Development REIT
is a product that was born out of Kenyan innovation and our capital market industry's commitment to the identification of
products that can have a transformative impact on promoting economic development while being wholly relevant to the
realities of our economy. Whereas globally, Income REITs such as the Stanlib Fahari REIT launched in late November 2015
have been well established since the mid-eighties, the Development REIT was conceptualized in Kenya in 2012 to ensure we
could channel public investment into real estate development and not only established income generating property. This
product offers a genuine opportunity to democratize participation in the lucrative real estate development sector that is
otherwise subject to extremely high barriers due to the costs of traditional financing for project development. It is
particularly appropriate that the Cabinet Secretary for Lands is officiating this occasion as the proper embracing of
Development REITS and Income REITS can have a catalytic effect on funding the challenges of housing at all levels as well
as urban development.
2. The D-REIT we are launching today targets to raise KES 2.3 billion but I believe that this is only the beginning and we
can look forward to more and larger real estate investment trust funds as we build our familiarity with this product.
3. Ladies and Gentlemen: Join me in congratulating Fusion Capital Limited for this bold move of being the first to test
the market with this product. Being the first to launch a product requires determination, courage and above all,
pragmatism. I trust that the successful launch and listing of this D-REIT on the Restricted Main Investment Market segment
of the NSE will stimulate interest from other capital market participants to bring to the market more similar products.
The structure in place was designed to ensure the highest level of transparency on the value and performance of the
underlying real estate assets so investors can rest assured by the quality of the assets invested in. This being the first
that has been a long journey of learning for all parties involved and I would like to appreciate Fusion for their patience
and commitment in seeing this day coming to fruition.
4. We note that through this offer, FRED – Commercial will add value to both the investors in this D-REIT as well as
bridge the gap in the real estate supply within the country. As most of you may be aware, it is the objective of the
Capital Markets Master Plan to make Kenya a center of excellence for real estate investments, and indeed today’s launch
marks a key milestone towards achieving that dream. This is in line with the objectives of the country’s blue print, the
Kenya Vision 2030 of making Kenya a Globally Competitive and Prosperous Nation with a High Quality of life by 2030. Making
Kenya a center of excellence for real estate has the potential of promoting Nairobi as an international financial center
since many savers and investors will converge in Nairobi looking for business opportunities to raise funds to finance real
estate as well as investors who will be looking for investment returns from real estate.
5. Ladies and Gentlemen: Successful offering and subsequent listing of FRED-Commercial will bring the total funding raised
through the Real Estate Investment Trusts in Kenya slightly below KES 6 billion. You will all agree with me that real
estate worth KES 6 billion has enormous positive externalities in terms of; Employment creation particularly for the
youth; spurring other business activities; revenue generation to the exchequer through taxable activities among other
6. We note that implementation of devolution has come with more resource requirements that can hardly be met through
traditional tax revenue collections. Innovative vehicles such as REITs will therefore go a long way in supplementing the
government’s efforts in meeting county government infrastructural requirements. The Authority therefore calls upon the
national and county government to entrench REITs as well as other innovative products such as Asset Backed Securities as a
key components in channeling lower cost long term financing into housing and commercial real estate development to support
accelerated urban development and the provision of adequate real estate infrastructure within the counties.
7. Ladies and Gentlemen: The Capital Markets Authority (Kenya) was last year recognized as the most innovative regulator
on the continent. This award was achieved through collaborative efforts between the Authority and all stakeholders. But in
the face of such recognition, the fundamental question continue to ask is what is there for Kenyans in this award. How do
we ensure our efforts towards innovation are translating to the improvement of quality of life for wananchi. The country’s
cumulative diaspora inflows in the 12 months to April 2016 was in excess of KES 160 billion. These are funds that we
should be targeting as we roll out innovative products such as REITs. We have to put in place consultative measures to
ensure that a chunk of these inflows find a home in the newly created Restricted Main Market segment at the NSE.
8. Allow me at this juncture to take this opportunity to laud the Ministry of Lands for their very constructive and
supportive manner they engaged with us in the development of the REIT framework, all the stakeholders who provided
critical inputs, the RBA for its responsiveness and facilitation to promote access by pensions and the Nairobi Securities
Exchange who have ensured the creation of an appropriate listing segment for this and other more complex yet impactful
9. Ladies and Gentlemen: As we introduce new products we cannot lose sight of the need for the highest levels of market
integrity in terms of good corporate governance, transparent financial reporting as well as continuing reporting practices
which are all key prerequisites for attracting the requisite capital. The National Treasury has been particularly
supportive on this front as witnessed with the recent gazettement of the Code of Corporate Governance Practices for
Issuers of Securities to the Public, 2016 and Guidelines on the Prevention of Money Laundering and Terrorism Financing in
the Capital Markets, 2016. These reforms are informed by the need to respond to the changing business environment and the
desire to align local standards to global best practice to promote institutional strengthening for listed companies.
10. Let me take this opportunity to convey my gratitude to the Government through the National Treasury for its consistent
support to the development of capital markets through an enabling policy and regulatory framework and further reiterate
our appreciation for its keen interest in the development of the capital markets. I just wish to underscore the following
key reforms implemented by the National Treasury that has brought forth the benefits we are witnessing today:
a). Removal of stamp duty on all transfers of assets during structuring of REITs as well as Asset Backed Securities;
b). Preferential corporate tax rate of 25 percent for companies listing on the Exchange by introduction;
c). Removal of 75 percent capping for foreign ownership in listed companies;
d). Exemption of listed securities from Capital Gains Tax;
e). Allowing private equity and venture funds to access up to 10 percent of pension funds; and
f). Amending and re-casting the investment guidelines for the pension funds to cater for Private Equity and Venture
Capital; REITs – both D-REIT and I-REIT; as well as the emerging global depository notes and receipts; Exchange
traded funds; Exchange derivative contracts all approved by CMA.
11. Ladies and Gentlemen: in this context, we note there are still important reforms to be implemented to support real
estate Investment products. Of particular importance is the strengthening of the systems to ensure sanctity and
reliability of title. Through the Capital Markets Master Plan implementation process we have identified key reforms to
complement market development and look forward to communicating those to the Ministry of Lands through the National
12. On our part as Capital Markets Authority, I wish to reaffirm our commitment, with the support of the Government, to
providing a facilitative environment for issuers, investors, and market players to participate and thrive in the capital
markets industry. The Authority remains focused and committed to ensuring the capital markets play their rightful role in
facilitating the realization of the Vision 2030 objectives.
13. On behalf of the Authority’s Board, Management, and the entire capital markets fraternity, I wish Fusion Real Estate
Development Trust aka the FRED – Commercial success in their business expansion plans. In conclusion, let me take this
opportunity to thank everyone in this room here today for taking the time to witness this great moment. This is just the
beginning of great things to come.
CMA launches international certification for the capital markets industry
Nairobi April 21, 2016… As part of its drive to enhance the positioning of Kenya as a premier investment destination, the Capital Markets Authority (CMA) has launched international certification standards for practitioners in the capital markets industry. The launch is the product of the signing of a Memorandum of Understanding (MOU) with the Chartered Institute for Securities & Investment (CISI) in September 2014.
Financial Sector Deepening Africa (FSD Africa) has provided funding for the development of the curriculum and examination for the International Introduction to Securities and Investment (Kenya) (IISI- K) certification to be awarded by CISI. This is part of a strategic partnership between FSD Africa and the CMA in which FSD Africa will invest £ 1.1 million in a technical assistance programme to strengthen the CMA’s institutional capacity and support the development of Kenya’s capital markets.
The curriculum for Stage One, IISI (Kenya), has already been developed. The first cohort of market candidates went through training and sat for the examination in November 2015. This included thirteen CMA staff members and eight officials from various training institutions in Kenya. The curriculum for Stage Two which will cover local conduct of business standards and market regulations, under the Kenyan regulatory framework, will be completed by June 2016.
Speaking during the launch event, the CMA Acting Chief Executive, Mr Paul Muthaura said: “The, certification programme will ensure that practitioners in the capital markets industry have the requisite skills and apply best practice as Kenya takes its position as the hub for the African capital markets. For Kenya to be competitive and attract international flow of funds client facing staff within capital market intermediaries need to adopt international certification standards to support the introduction of more diversified products in the market, as well as to ensure that engagement with investors is consistent and meets the highest possible professional and ethical standards. The introduction of certification standards, aimed at creating a highly skilled talent pool, is aligned to the Capital Market Master Plan, the ten-year blue print for the Kenyan capital markets industry, and the ambition of the country to become a regional and International Financial Centre.
Mr. Muthaura added that the adoption of CISI’s International Introduction to Securities and Investment (IISI) program, as an industry recognised certification standard for Kenya is underpinned by the intention to support its adoption within the wider East African Community (EAC) region, with the recognition that capital market players are increasingly operating across borders.
Julias Alego, Director of Professional Education, FSD Africa said: "We are delighted to provide assistance for this certification programme which is an important step for Kenya towards boosting the professionalism of its capital markets and enhancing its attractiveness as an investment destination in sub- Saharan Africa..’’
Mr. Kevin Moore Chartered MCSI, Director of Global Business Development of CISI said: “We are very pleased to work with CMA to enhance and promote professionalism and professional standards in the capital markets industry in Kenya.” He further added that CISI has already established a Computer Based Testing (CBT) Center at the ICEA building in Nairobi’s Kenyatta Avenue. The cost of registration and undertaking Stage One exams has also been set at a subsidized rate to support market uptake.
The Authority issued a circular to all market licensees on Monday November 9th, 2015 informing them of the market certification and competency standards to be adopted pursuant to Regulation (19)3 of the Capital Markets (Corporate Governance) (Market Intermediaries) Regulations 2011.
Notes to Editors:
Chartered Institute for Securities & Investment
Based in the City of London CISI is the professional body of choice for practitioners within the securities and investment industry. With representative offices in financial centres including Dublin, Singapore, Dubai, Mumbai and Colombo CISI has a range of globally recognized qualifications and supports individuals through membership from the student level to individual charter status, the pinnacle of professionalism. It works to ensure that products and services are up to date, relevant, and that they meet the needs of the ever changing financial services industry. Every year, over 40,000 examinations are taken in more than 50 countries around the world by candidates who are employed by 92 percent of the world’s top banks.
Capital Markets Authority
The Capital Markets Authority was set up in 1989 as a statutory agency under the Capital Markets Act Cap 485A. It is charged with the prime responsibility of both regulating and developing an orderly, fair and efficient capital markets in Kenya with the view to promoting market integrity and investor confidence. The regulatory functions of the Authority as provided by the Act and the regulations include; Licensing and supervising all the capital market intermediaries; Ensuring compliance with the legal and regulatory framework by all market participants; Regulating public offers of securities, such as equities and bonds & the issuance of other capital market products such as collective investment schemes; Promoting market development through research on new products and services; Reviewing the legal framework to respond to market dynamics; Promoting investor education and public awareness; and Protecting investors’ interest.
FSD Africa www.fsdafrica.org is a non-profit company, funded by the UK’s Department for International Development, which promotes financial sector development across sub-Saharan Africa. It sees itself as a catalyst for change, working with partners to build financial markets that are robust, efficient and, above all, inclusive. It uses funding, research and technical expertise to identify market failures and strengthen the capacity of its partners to improve access to financial services and drive economic growth. It believes strong and responsive financial markets will be central to Africa’s emerging growth story and the prosperity of its people.
Top of Form
Nairobi, 10 May, 2016…The Capital Markets Authority has granted approval to the Kenya Electricity Generating Company (KenGen) to undertake a rights issue in which the electricity generator seeks to raise Kshs28.7 billion by issuing and listing 4,396,722,912 new ordinary shares. The rights will be issued on the basis of two new ordinary shares for every one existing share held by each shareholder on the register as at Friday 13 May, 2016.
According to KenGen’s information memorandum, the proceeds of the rights issue will be used partly to fund new geothermal and wind power projects so as to generate an addition 720 megawatts of electricity, up from 1,631 megawatts as at 30 June, 2015. The funds will also inject new equity into the Company, so as to create additional headroom that will enable it to access long-term loans at low interest rates, to facilitate its expansion.
KenGen noted in the information memorandum that the Government, the major shareholder with a 70 percent stake, will take up and pay for its full rights through the conversion of part of the on-lent loans to the company in the sum of Kshs20 billion.
“The Authority is satisfied that the disclosures therein comply with the requirements of Regulation 11 of the Capital Markets (Securities)(Public Offers, Listing and Disclosures) (Regulations) 2002, and contain the information that will enable investors to make an informed decision on the rights issue”, CMA noted in its statement. A minimum of 65 percent of the rights issue is required to be accepted to be declared successful.
Nairobi October 13, 2015…The Capital Markets Authority grants approvals based on the information made available at the time of consideration and subject to the undertakings from the Directors of the Issuer and their Professional Advisors that the disclosures in the Information Memorandum are complete, provide all the information that investors require to make an informed decision and are not misleading.
Where information arises following the grant of such approval, the Authority is vested with powers to take appropriate action and to give such directions as it deems fit in the public interest and to protect investor interests.
The Authority will work with the Kenya Deposit Insurance Corporation, the directors of Imperial Bank and the Central Bank of Kenya to identify the most appropriate resolution options with respect to the Corporate Bond issued by Imperial Bank in the interests of investors and other relevant stakeholders.
The Bond will in the interim remain unlisted at the Nairobi Securities Exchange until further notice.