Family Bank and Why Listing by Introduction

Family Bank shareholders have voted to list the bank at the Nairobi Securities Exchange(NSE) by introduction in early 2026.

The idea behind this method and not the popular Initial Public Offer(IPO) route, is to provide liquidity for its shareholders already with stakes in the business.

Introduction listings can be less expensive than IPOs, as they don’t involve the same level of underwriting fees and regulatory requirements.

Family Bank is also avoiding the numerous regulatory hurdles at the NSE, allowing listing its shares more quickly and with greater flexibility in terms of pricing and timing. Existing shareholders can sell their shares without Family Bank having to issue new stock, minimizing dilution of ownership.

Under this method, share prices can be determined by market forces rather than a fixed IPO price, potentially leading to more accurate valuation. The process of listing via introduction can also be more straightforward, with fewer formal prospectuses and marketing efforts required.

When a company decides to join the stock exchange, there are different ways it can do so.

The most common route is through an Initial Public Offering, or IPO. This is when a company offers its shares to the public for the very first time, usually because it wants to raise fresh capital.

The money raised often goes into funding expansion projects, repaying debt, or fuelling growth initiatives. In this process, new shares are created and sold to investors, typically with the help of underwriters who handle pricing and distribution. A good example locally is Safaricom’s IPO in 2008, which attracted massive interest from the Kenyan public.

On the other hand, a company may choose to list by Introduction. Unlike an IPO, this method does not involve selling new shares.

The third approach, which has become more popular globally, is the Direct Listing. In this case, the company does not issue new shares, but unlike an introduction, existing shareholders—such as founders, employees, or early investors—can sell their shares directly to the public on the exchange.

It is generally cheaper than an IPO because there are no underwriter fees, but it also carries more risk since there is no guaranteed pricing support. This method has been used by global giants such as Spotify in 2018 and Coinbase in 2021.

An IPO raises fresh capital, an Introduction simply lists existing shares without raising funds, and a Direct Listing creates a trading market by allowing current shareholders to sell directly.

Pre-IPO stocks are typically available to institutional investors and High Networth individuals. While these requires significant investment amounts, the most convenient way is to find someone who already has Family bank shares. Brokers and investment banker can also broker such deals at a fee.

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