Enters Old Mutual

Old Mutual (OM) finally bought an NSE seat through a buyout in Reliable Securities Ltd that was placed under statutory management last year. The exact amount of the acquisition has not been relesead. I’m sure is a colossal amount, going by the Sh451 million bid they placed for the Fransis Thuo (FT) seat, that was taken up by RenCap for almost half the OM bid at Sh251 million.

Last year, the NSE revalued the minimum amount that a new entrant would pay for a seat at the bourse to Sh251 million from the previous Sh50 million.

Back then the reason given for not selling FT to OM was that it was one of the market mover through its equity related units and could not be allowed to also deal in the stock market as a broker. So what has changed?

Some analysts (@SokoAnalyst and @AlykhanSatchu) say existing brokers are likely to loose out following the entry of OM; in what I presume is due to the low transparency levels and OM alignment with foreign investors. OM also has got good corporate governance compared to most NSE brokers.

In a span of about two years, at least five ‘old and shaky’ stockbrokers have been bought out by new players (mostly banks)

Old & Shaky	Buyer
Fransis Thuo	RenCap
Solid investment	NIC Bank
cross Field	ABC Bank
Bob Matthews	Coop Bank
Reliabe	Old Mutual

I'm expecting Ngenye Kariuki, which is also under statutory management, will go the same route.

NSE still remain a closed knit exclusive club with the ‘Big Boys’ running the show. This has made it almost impossible for aspiring licensee to obtain a seat on the market. This is likely to change if the long awaited demutualization takes place any time soon.