A Market Awakens: Kenya’s Capital Markets Regain Momentum into 2026

NAIROBI (Capital Markets in Africa) – Kenya’s capital markets have started 2026 with a bang. With Kenya Pipeline Company’s (KPC) ongoing Initial Public Offering (IPO), the IPO drought on the Nairobi Securities Exchange (NSE) is ending, and the rest of the year looks promising. That said, it would be remiss to not reflect on the lessons of 2025 and what they might signify for the coming year.

Close behind KPC, Family Bank is in the advanced stages of its own listing on the NSE, having obtained shareholder approvals. Recent transactions have stirred the transaction pot, pushing valuation to the forefront for even the most casual observers. No less can be expected from Family Bank’s long-awaited offering. With a diverse number of listed peers and multiple bank acquisitions having recently taken place, there are several comparators for the Family Bank listing valuation. What is evident is that, over and above the usual institutional investors, the investing public is now more evaluative of fundamentals, even in a sentiment-driven market such as ours.

Looking to the debt markets, both Safaricom PLC and East Africa Breweries Limited successfully launched multi-billion bond programmes in late 2025, sparking a resurgence in the corporate bond market. This came as no surprise, as the Central Bank’s easing cycle has significantly depressed prevailing interest rates in the country. As long as interest rates remain low, an ideal opportunity exists for corporates to restructure their balance sheets and lock in debt financing at favourable rates for the medium term. Learning from Safaricom’s experience, future debt-raising companies should also consider what pricing advantages they may obtain from structuring their debt programmes as green or sustainability-linked bonds.

Last year also saw the first industrial Real Estate Investment Trust (REIT) in Kenya, with Africa Logistics Properties (ALP) launching its USD 45 million income REIT, with anchor investment from the United Kingdom’s Private Infrastructure Development Group. The ALP REIT, being the first dollar-denominated REIT in Kenya, is a pioneer investment opportunity for investors seeking dollar returns and sector diversification.

The REIT market remains a not-so-hidden gem in Kenya, where our cultural fixation with real estate investment is unending. Rather than the ever-present shopping malls, several commercial real estate sectors remain underserved, despite inroads made to date. Purpose-built student accommodation is a tested sector but largely untouched outside the Nairobi metropole. The ALP REIT has also lifted the veil on the beauty that industrial warehousing and logistics offers. A market observer would reckon that diversification into under-exploited sectors such as data centres, senior living communities and even hospitality remains feasible.

For this to be achieved, more regulatory predictability, particularly with respect to the structuring and distribution of dividends from REITs, is critical. The REITs Association of Kenya has spiritedly been at the forefront of lobbying for this, and with support from the National Treasury, Kenya Revenue Authority and the Capital Markets Authority (CMA), the REIT market is ready to bloom.

Kenya also got its first asset-backed security, with Linzi Finco 003 Trust raising KES 44.7 billion to fund the construction of the Talanta Sports Complex. After a few false starts from past issuers who considered similar structures, this transaction served as proof-of-work that ABS structures can be viably achieved in Kenya. Learning from this, as well as the Government’s recent push towards securitisations, the CMA should take the reins in enacting substantive regulations on asset-backed securities to replace the 2017 policy guidance note used to date. This could assist several institutions, including those in the banking, asset leasing and related sectors, to free up their balance sheets to pump additional credit into the economy.

Similar regulatory proactivity would be welcome with respect to exchange-traded funds, giving flesh to the policy guidance note issued in 2015. Following the listing of the Satrix MSCI World Feeder ETF, Kenya now has two well-established, cross-listed ETFs, with multiple players considering structuring others. These listings show that the market is ready for substantive regulations from the CMA to provide further certainty in structuring, trading and investor confidence.

Retail investors will not be left behind in 2026. The past few years saw a surge in the popularity of Money Market Funds (MMFs), inspired by healthy returns from elevated coupons on Government securities. However, 2025 was the year of the special fund, offering favourable returns through actively managed portfolios in a wider array of securities than MMFs. This trend is likely to be sustained into 2026, with fund managers pressed to innovate new special fund offerings that differentiate from current available options.

As Kenyan retail interest in equity markets has surged, investors have flocked to international markets in a diversification push. This has attracted the interest of both local players, such as Hisa and Ndovu, as well as reputable platforms, with the latest being Capital.com after being licensed by the CMA. This local interest in foreign equities, spurred by an informed, return-hungry, web-savvy population, should be a wake-up call to local stockbrokerages to not be left behind by a renewed Kenyan interest in the capital markets. An all-in-one offering to investors of both local and foreign stocks, including through partnership with international service providers, is an opportunity waiting to be seized.

Lastly, many of the online intermediaries are raring to go in terms of offering various products related to virtual assets, attracted by a retail market base that has grown into financial ability as virtual assets made their debut. As we await regulations supporting the recently enacted Virtual Assets Service Providers Act, a lot of awareness and regulatory flexibility will be required to reverse the hesitancy inspired by past restrictions on virtual assets.

The year 2025 was evidently one of firsts and of resurgences in Kenya’s capital markets. With the start we have had so far to 2026, it appears the momentum is being sustained, and we are all the better for it. It is said that the role of regulation is not only to set the boundaries of operation but also to foster progress. Both the Government and regulators should then be ready to strike a balance that allows for such innovation while maintaining the discipline that inspires trust in our financial markets.

Additionally, market players should stoke their innovative fires and aim to widen their product offerings. While Kenya may not be a deeply sophisticated market, there is enough room and market demand to innovate beyond the vanilla products of yesteryear.  

Mutugi Mutegi is a Senior Associate at Bowmans Kenya and a member of the Corporate Commercial department. Mutugi specialises in advising clients on regulatory compliance across various financial sectors in Kenya. This includes advising on capital markets and securities law, insurance regulatory law, mergers and acquisitions and regulatory compliance.
Mutugi is also a member of the competition advisory and has been involved in advising on a wide range of clients on merger filings, restrictive trade practices and competition compliance.
He is an advocate of the High Court of Kenya and is a registered Company Secretary.