Listing on the NSE Growth Board: A Capital-Raising Option for Kenyan Health-Tech Companies

Kenyan health-tech companies raising growth capital usually think first of venture capital or bank debt. A third route gets less attention: listing on the Nairobi Securities Exchange’s Growth Board, formally the Growth Enterprise Market Segment (GEMS). GEMS was created for start-up, small and medium-sized companies that cannot yet meet the requirements of the Main Investment Market Segment (MIMS), letting a company raise public capital with lower compliance costs and entry thresholds than a main-board listing. For a health-tech company weighing its next raise, understanding how GEMS works, and how it compares to private equity, venture debt and cross-border listing, matters.

Eligibility Requirements: Lower Thresholds Than the Main Board

GEMS eligibility is set out in the Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations, 2002, and in the Exchange’s own Listing Rules. An issuer must be a company limited by shares, registered under the Companies Act, with a minimum issued and fully paid-up ordinary share capital of ten million shillings and at least 100,000 shares in issue. The board must have at least five directors, one-third of them non-executive. Shares must be freely transferable and deposited with the central depository. At least 15% of issued shares must be available to the investing public, excluding controlling shareholders and senior managers, with at least 25 public shareholders maintained within three months of listing. The issuer must not be insolvent, and its directors and auditors must confirm in writing adequate working capital for the following twelve months.

MIMS sets a longer trading history, a larger shareholder base and higher capital thresholds, which is why GEMS exists as a lower-threshold alternative. That matters for health-tech issuers, many still pre-profit: GEMS does not demand the multi-year profit record MIMS effectively requires.

The Listing Process and the Nominated Adviser

The defining feature of a GEMS listing, compared with MIMS, is the adviser structure. A MIMS applicant needs both a lead transaction adviser and a sponsoring stockbroker. A GEMS applicant instead appoints and retains a single Nominated Adviser under a written contract, kept in place for as long as it remains listed. The Nominated Adviser carries real regulatory weight: it must confirm to the CMA and the Exchange that the issuer satisfies the GEMS conditions, verify the accuracy of the disclosure documents filed with the offer, and ensure directors complete an induction programme before listing. It is the gatekeeper the CMA and NSE rely on to vet a smaller issuer, allowing lower entry thresholds without lowering investor protection. A health-tech company should expect scrutiny of its structure, related-party arrangements and regulatory dependencies before an information memorandum goes to the CMA for approval.

Ongoing Disclosure Obligations

Listing is not a one-off compliance event. A GEMS issuer is bound by the continuing obligations in the Fifth Schedule to the Public Offers, Listing and Disclosures Regulations: periodic financial reporting and, more demandingly, disclosure of anything reasonably expected to have a material effect on the market price of its securities, within twenty-four hours, simultaneously to the CMA, the Exchange and the public. For a health-tech issuer this reaches beyond financial and governance disclosures: a regulatory approval granted or withdrawn, a data breach affecting patient records, a change in reimbursement arrangements, or the loss of a key hospital contract could all qualify. Boards need a process for spotting these events quickly, not just at quarter-end.

GEMS Compared to Other Capital-Raising Routes

A GEMS listing is one option among several. Private equity remains the most common route for growth-stage Kenyan health-tech companies: it brings capital and operational support, but also board representation and an eventual exit to plan around. Venture debt avoids equity dilution but adds fixed repayment obligations a still-unprofitable business may struggle to service; our guide to venture financing for Kenyan health-tech startups sets out the key terms founders should expect on that route. A cross-border listing reaches a deeper capital pool, but multiplies compliance across regulators and is usually realistic only once a company has scaled well beyond GEMS eligibility. GEMS sits between these: public capital and a tradable share price, without debt’s repayment burden or a private equity investor’s control, at the cost of public disclosure and an ongoing Nominated Adviser relationship.

It is worth being realistic about uptake. GEMS has existed for well over a decade, yet a review by Financial Sector Deepening Kenya found only a handful of companies had listed against far more ambitious targets in the Capital Markets Master Plan, and the Exchange’s own current listing shows GEMS remains a small segment of the market. That does not make GEMS the wrong choice, but it means going in with a clear view of why listing serves the company’s goals better than the alternatives.

Sector-Specific Considerations for Health-Tech Listings

Two issues come up repeatedly when a health-tech company prepares GEMS disclosure documents. The first is data protection compliance. A business processing patient health data is a data controller or processor under the Data Protection Act, No. 24 of 2019, expected to be registered with the Office of the Data Protection Commissioner, to have conducted data protection impact assessments where required, and to have breach-notification procedures in place. Investors and the Nominated Adviser will treat this as a disclosure item in its own right, not a footnote to the general risk factors.

The second is regulatory-approval-dependent revenue. Many Kenyan health-tech businesses earn revenue that depends on a licence, registration or approval from a sector regulator: product registration for a diagnostics or medical device company, facility licensing for a telehealth or laboratory network, or inclusion in a reimbursement scheme. Investors will scrutinise how much revenue rests on an approval that could be delayed or withdrawn, rather than accepting projections as guaranteed. Our overview of the life sciences and healthcare regulatory landscape in Kenya covers the approval regimes most likely to sit behind this kind of revenue.