Faida Investment Bank is poised to earn approximately Sh1.16 billion following its role as lead transaction adviser in the initial public offering of Kenya Pipeline Company, underscoring the significant financial rewards available to intermediaries managing large-scale capital market transactions.
The State-backed share sale targeted Sh106.3 billion, but demand exceeded expectations, with the IPO attracting a 105.7 percent subscription rate and raising Sh112 billion. The oversubscription qualifies Faida for a performance-based commission equal to one percent of the gross proceeds, translating to roughly Sh1.06 billion, in addition to 16 percent value-added tax as stipulated in the offer documentation.
Success fees in capital markets transactions are typically designed to reward underwriters and advisers for effectively marketing and closing deals. In the case of the Kenya Pipeline IPO, the payout reflects the adviser’s role in coordinating investor outreach, preparing transaction documentation, guiding pricing decisions and ensuring regulatory compliance throughout the listing process.
Despite the eventual success, the offering faced notable headwinds during its marketing phase. Concerns over valuation, investor hesitation and the extension of the offer period created uncertainty around whether the transaction would meet its targets. For the sale to proceed, the government had set a minimum threshold of Sh53.1 billion in subscriptions and participation from at least 250 investors.
The final outcome was supported largely by institutional investors and regional participation, which compensated for limited engagement from other investor categories. Local retail investors purchased shares worth Sh4.1 billion compared with their Sh21.2 billion allocation, while foreign investors committed only Sh32.7 million against the same Sh21.2 billion target. Oil marketing companies, which depend heavily on pipeline infrastructure, purchased just Sh22.9 million, representing 0.14 percent of the Sh15.9 billion set aside for them.
Beyond the success fee, Faida will receive an additional Sh98.6 million for its advisory role in the transaction. The firm may also earn additional income through placement commissions linked to the volume of IPO shares processed by participating brokers. These placement fees are legally capped at 1.5 percent of the offer value, meaning the 22 stockbrokers and investment banks involved in the transaction will share a maximum of Sh1.59 billion.
Overall, the government is projected to spend approximately Sh3 billion on IPO-related fees, excluding the conditional success payment to Faida. Other advisers participating in the transaction will receive smaller allocations. Image Registrars will earn Sh70.35 million, including Sh28.3 million in advisory fees and Sh42.05 million in reimbursable costs. Three receiving banks will collectively earn Sh16.35 million, distributed as Sh9.96 million to Co-operative Bank of Kenya, Sh3.6 million to KCB Bank and Sh2.78 million to Stanbic Bank Kenya.
Legal advisers TripleOKLaw Advocates and G&A Advocates LLP are set to receive Sh31.9 million, while PricewaterhouseCoopers will earn Sh13.45 million as reporting accountants. Public relations and marketing roles were handled by Apex Porter Novelli and Belva Digital at Sh42.13 million and Sh12.26 million respectively.
Additional transaction expenses include Sh40 million for advertising, Sh6.25 million for proofing services and Sh12.5 million in other costs. Regulatory and listing charges include Sh30 million paid to the Capital Markets Authority for IPO approval and Sh1.5 million in listing fees to the Nairobi Securities Exchange.
The transaction represents a major financial boost for Faida Investment Bank at a time when Kenya’s investment banking industry faces rising competition for brokerage commissions and advisory mandates. The firm reported a net profit of Sh216,107 in the year ended December 2024, reversing a net loss of Sh14.28 million recorded in 2023. Revenue streams included Sh123.22 million in brokerage commissions and Sh50.21 million in advisory fees during 2024.
Established in 1995 by Bob Karina as Kenya’s seventh stockbroker, the firm has since expanded its regional presence, launching operations in Rwanda in 2009 under Faida Securities Rwanda. Market data indicates that in 2025 the bank ranked third in equity trading value on the Nairobi Securities Exchange at Sh35.97 billion, representing a 12.36 percent market share. The segment was led by EFG Hermes with Sh60.8 billion in trades, accounting for 20.9 percent, followed by SBG Securities with Sh45.05 billion and 15.48 percent market share.
In the bonds market, Faida also ranked third with a 7.55 percent share, trading securities worth Sh409.34 billion. The segment was dominated by Capital A Investment Bank, which handled Sh1.06 trillion in trades for a 19.68 percent share, followed by Standard Investment Bank at Sh755.1 billion representing 13.93 percent of market activity.
The Kenya Pipeline IPO therefore not only strengthened the government’s capital raising strategy but also delivered a major financial milestone for one of the country’s leading investment advisers.
