Aim company gains cross-listing in Kenya

small oil services company is to become the first from the UK’s Alternative Investment Market to gain a full cross-listing of its shares on the Nairobi Securities Exchange — raising a further $5m from Kenyan investors in the process, to add to the $30m it raised in London last June.

On Wednesday, Atlas Development & Support Services — an east African oil group with an annual turnover of $40m — will list its entire share register of 400m shares on Kenya’s stock market, at a price of 11.50 KES each.

Carl Esprey, Atlas’s chief executive, told the Financial Times that his company had decided against a more usual subsidiary listing in order to bring in more investors. “With a subsidiary listing, normally you list 10 per cent, then fight over who owns it,” he said. “But, with a cross-listing, you truly open your register to everyone — it will create one big blob of shareholders.”

Atlas, which was previously known as African Oilfield Logistics Limited, provides oil explorers with services ranging from road construction and drill site preparation to setting up camps and doing laundry. It mainly holds contracts with companies working in Kenya, but also operates in Ethiopia, Mozambique and Tanzania.

“We would have listed the company in Kenya entirely to start with, but the risk appetite for what we did was very low in Kenya,” Mr Esprey explained.

Altas represents the fourth listing on the Growth Enterprise Market Segment of Kenya’s exchange, known as GEMS. It is the country’s equivalent of London’s Aim, and was launched last year in an attempt to attract more small and medium-sized companies.

Christopher Hartland-Peel, of equity research firm Hartland-Peel, said: “It’s definite progress, a strong first step, because it’s internationalising the Nairobi stock exchange.”

However, he questioned how easy it would be to trade shares on GEMS. “The key thing is how much trading is there going to be on there — if you look at the cross-listings in east Africa there’s minimal trading. They’re all trading in their home market.”

He pointed out that domestic pension fund investors tended to buy and hold stock, rather than trading it, and suggested that the London market would hold more appeal as it is far more liquid.

Edward Burbidge, head of Edward Burbidge Capital, which acted as nominated adviser to Atlas, said Kenyan pension and life funds, unit trusts and individuals were all investing in the Kenya listing.

“It’s part of a bigger initiative — the government is trying to push local shareholding for companies involved in natural resource exploration here,” he said.

About 70 per cent of Atlas’s business comes from services to the oil sector, with the rest from mining and geothermal projects. However, despite the global drop in oil prices, and its deterrent effect on expensive offshore exploration, Mr Esprey said Atlas’s onshore contracts — a significant portion of which are with Tullow Oil and its contractors in Kenya’s Turkana region — were safe.

“Oil price falling has hit everyone but you have this move in oil and gas to prioritise lower price exploration,” he said. “I still don’t think Kenya’s in the worry zone for Tullow stopping spending.”