A corn Holdings, Nairobi-based property developer, listed the first green bond in East and Central Africa after it introduced its Sh4.3b green bond on the Nairobi Securities Exchange (NSE) in January 2020. Same month, the company put Kenya on the map by floating its green bond at the London Stock Exchange (LSE).
The bond became the first Kenya shilling denominated corporate green bond to be listed in the United Kingdom. Green bonds are designed to mobilize resources from domestic and international capital markets for the adaptation of climate change, projects involving renewables and other environment-friendly projects.
These bonds mainly finance projects aimed at preventing pollution, protecting aquatic and terrestrial ecosystems, energy efficiency, sustainable agriculture, fishery and forestry, clean transportation, sustainable water management and the cultivation of environmentally friendly technologies. The aim of the $40m green bond is to assist in raising funds that will go towards building 50,000 environmentally friendly housing units for university students in the city.
President Uhuru Kenyatta who was present at the LSE to ring the bell that commenced the trading of the bond urged investors in the United Kingdom to use the country as a gateway to invest in East Africa and Africa as a whole as well as act as a bridge to the emerging market of more than 1.2 billion created by the African Continental Free Trade Area (AfCFTA) that is about to be implemented.
“Kenya is one of the top 10 fastest growing economies on the continent and also one of the most pro-business nations in Africa. There is no better place to appreciate the realities of global economic activity and investment trends than this trading floor,” he said.
The president also said that the country will continue to develop an investment environment for sustainable finance after finalizing a policy framework to enable the Kenya to issue a sovereign green bond and strengthen its position as a regional financial hub.
“I invite the LSE to continue working with Kenya towards achieving this goal,” he said adding that the bonds not only provide opportunity for African countries but for the Caribbean and the Pacific region, to access capital in order to support growth in the face of more significant and earlier climate impacts.
On the other hand, Edward Kirathe, CEO of Acorn Holdings, said the listing had opened doors for other Kenyan and African businesses. “The listing has opened the way for Acorn and other Kenyan businesses as well as African businesses to access the huge pools of capital available in the international market,” he said.
With the green bond cross listed in London and Nairobi, it will enable listed shares to trade in multiple currencies giving the company more liquidity, greater ability to raise capital and a higher corporate standing among its peers. Apart from this, the bond comes with a guarantee by development agency GuarantCo. The structure and international listing should alleviate the concerns over transparency, lack of available data and low liquidity that have kept many investors on the sidelines.
In fact, according to Shrey Kohli, head of debt capital markets and funds at LSE, an international listing in Kenyan shillings, or any other local currency, can not only help issuers raise investment without bearing foreign-exchange risk, but can also provide increased visibility and profile to set benchmark yields for future issuances. Additionally, Alok Sharma, UK’s Secretary of State for International Development says that the cross-listing of the green bond is backed by UK regulation environment and partial guarantees for investors and it presents the UK as the partner of choice for Africa.
