Kenyan avocado exporter Karakuta eyes NSE listing

Karakuta Fresh Produce, an exporter of avocados and herbs, is preparing to list on the Nairobi Securities Exchange (NSE). The Kenyan company is seeking the approvals needed for a listing by introduction. Existing shares would be listed on the exchange, rather than Karakuta issuing new shares to the public.

That means the transaction is not an IPO and does not involve raising fresh equity through the listing. Karakuta has built its business around exporting fresh produce from East Africa. It works with more than 3,000 farmers in Kenya, Uganda and Tanzania and sells into markets including the European Union, UAE, Malaysia and India. China is also among the markets the company is targeting.

An export business with a long supply chain

There is a lot that happens between an avocado being picked and it reaching a supermarket or buyer overseas. Karakuta relies on farmers for the produce, but also on businesses involved in collection, transport, packaging, storage and other parts of the export process.

That includes smaller operators that provide trucks, packaging materials, cold storage and farm inputs. If Karakuta increases the amount of produce it handles, those suppliers could see more demand. Whether that happens will depend on the company's export volumes and how quickly it expands its farmer network.

What farmers get from the relationship

Karakuta's farmer network gives growers a route into export markets outside East Africa. But exporting fresh produce comes with strict requirements around quality, volumes, timing and logistics. 

Farmers supplying the export market have to meet those requirements if they want to remain part of the supply chain. The company is therefore not just buying avocados. It is coordinating a chain that stretches from farms in East Africa to buyers in other parts of the world.

Why the NSE listing is different

Karakuta's proposed listing is notable because the company is coming to the public market with an existing agricultural export business. The listing will not provide the company with the type of fresh capital an IPO would. It will instead make existing shares available for trading on the NSE.

The company still needs the necessary regulatory approvals before the listing can proceed. If those approvals are granted, investors will be able to buy and sell shares in a business whose fortunes are tied to avocado production, international demand and the cost of getting fresh produce from East Africa to overseas markets.