David Warutere, Director, Market Operations, CMA, Kiprono Kittony, Chairman, NSE, Dilip Pal, Group Chief Finance Officer, Safaricom PLC and Frank Mwiti, CEO NSE during the Safaricom Green Bond NSE bell-ringing ceremony
Safaricom PLC has registered firsts at the Nairobi Securities Exchange (NSE) following the overwhelming response to their first green bond offered to individual investors. This reflects increased buying power of individual investors in Kenyan capital markets and the role of technology in the sector.
The telcommunications giant has received bids amounting to KES41.4 billion for the initial tranche of Domestic Medium Term Notes (MTNs) Programme, more than double the original amount on offer. Based on the total number of bids, Safaricom will offer KES20 billion with an oversubscription ratio of 175 per cent, thus the largest green bond issue ever in Kenya.
According to Safaricom, retail investors comprised the majority of applicants in the offer as 2,453 retail applicants out of all applicants made up 96 per cent of the applications. Interestingly, 59 per cent of these applications were made using USSD channels, and the payment methods used included M-PESA. This shows how technology is redefining the capital markets entry process.
The bond was officially listed at the NSE on Monday, marked by a bell-ringing ceremony that marked Safaricom’s comeback into the capital market and the launch of its MTN Program, which is linked to its Sustainable Finance Framework.
During the listing process, Safaricom Group Chief Finance Officer Dilip Pal noted the enthusiasm shown by the investor community indicated the company and Kenya’s capital markets were well regarded.
“This deal shows what is possible when local capital markets are engaged thoughtfully and purposefully. This is definitely a vote of confidence in our fundamentals and strategy and long-term vision and is also a good indicator that the capital market is resilient and deep enough in Kenya,” said Pal.
Green Bond represents a major shift in the financing strategy that Safaricom is adopting. This is aimed at ensuring that capital markets become a sustainable source of long-term finance, in addition to the other methods that the company has been using. This is a clear indication that the company is determined to become a disciplined issuer.
The proceeds from the bond will be used to finance initiatives that will facilitate the energy-efficient digital transformation of Safaricom. Such initiatives include the implementation of 5G infrastructure, the solarization of Safaricom’s sites, and the replacement of outdated technology through cleaner and more efficient technologies.
Apart from Safaricom, the successful listing is being seen as a milestone in the development of capital markets in Kenya and their ability to attract long-term funds to achieve sustainable investment goals. This milestone further strengthens the growing significance of green and sustainable financing to support national development goals such as actions to address climate change and digitization.
The organization reiterated its support for enhancing market engagement through innovation. Other products for example, Ziidi and Safaricom’s Mobile Money Market Fund, have managed to offer savings and investing opportunities to many by bridging the gap between capital markets and customers through the use of mobile technology.
Safaricom also stated that it will continue to search for other innovative ways of increasing access to investment products with a view of enhancing financial inclusion.
The Green Bond is now officially listed on the Nairobi Securities Exchange and is open for trading, thereby opening a new chapter in sustainable finance and retail investment in the capital markets in Kenya.