Nairobi Business Ventures (NBV), a local shoe and leather accessories retail chain operating under the brand name KShoe, today listed by introduction on the Growth Enterprises Market Segment of the Nairobi Securities Exchange (NSE).
The company listed 23.6 million shares at a share price of Ksh5, giving the company a valuation of Ksh118 million shillings. “A high tax regime of up to 40 per cent on raw hides and skins exports has created a great business environment for local manufacturers of leather products,” said Mr Raj Srungarapu, the K-Shoe Managing Director.
The listing comes shortly after the company raised Ksh28 million from 26 new shareholders through a private placement concluded on June 10th 2016. Dr Alfred Nzomo Kithushi, the KShoe chairman, said the capital raising initiative will go a long way in supporting the company’s expansion drive and planned venture into manufacturing of leather footwear and accessories.
Mr Abotula and Mr Srungarapu are the majority shareholders. Following the listing, the two current majority shareholders will hold a total of 69.4% equity stake while the remaining 30.6% will be held by the public.
As a sign of commitment to the growth of the Company and confidence in the long-term business fundamentals, the two majority shareholders and founder members, have agreed not to offload their shareholding initially for a period of two years after the listing. In addition, the directors have equally recommended retention of at least 65% of the company’s earnings in the next five years to strengthen the balance sheet position and facilitate opening of new retail outlets.
“NBV’s immediate focus is on expansion of retail outlets in Nairobi and other cities in Kenya,” noted the Chairman. Kenya’s leather sector is presently estimated to be worth about Ksh10 billion, but government experts estimate that value addition has the potential to increase the country’s earnings from leather to 10 times more. About 90% of hides and skins produced in Kenya are exported to external markets in both raw and semi processed form, and 80% of the exports are currently in semi-processed state; otherwise referred to as wet-blue.
NBV’s vision is to start manufacturing quality leather accessories locally thus changing the current tide. The Leather Development Centre recently projected that if the country produced leather from all its hides and skins, this figure can rise exponentially. According to the Industrialization Ministry, shoes are 12 times more expensive than the raw hides they are made from, but which are mostly exported unprocessed.
“I am confident that K-Shoe plans to venture into manufacturing will yield great returns, especially during this phase when the Government is keen to revive the tanning industry and make Kenya a big exporter of shoes, bags and other products,” said the KShoe MD.
According to Mr Vasu, with continued incentives from the Government and technology transfer from foreign companies, Kenya has the capacity to produce its own leather-wear as to promote local manufacturing. With the continuous support of all stake holders – government, banks, shareholders, customers, suppliers, landlords among others – KShoe remains focused on its vision to provide quality locally manufactured leather accessories.
Speaking during the event NSE Chief Executive Geoffrey Odundo said: “Nairobi Business Ventures becomes the first leather footwear and accessories retailer to list on the bourse. The listing is a clear indicator of the confidence that our Small Medium Enterprises continue to have on our Capital Markets, as they seek to raise capital to facilitate their various strategic initiatives”.
NSE Chair, MrSam Kimani said SMEs are the engine of economic growth, cutting across all sectors of the economy and sustaining majority of our households. “We are an African Brand and want Kenyans to buy Kenyan and build Kenya. We have created employment opportunities, through hiring of reliable and competitive employees since the company opened,” said Dr Kithusi, the company’s chairman.