Longhorn Kenya shares surge 43pc on market debut
Posted Wednesday, May 30 2012 at 19:08
Longhorn Kenya shares closed 15 per cent higher on the publishing firm’s debut at the stock exchange, raising the company’s market valuation by nearly Sh125.5 million to Sh944.7million.
The counter recorded a single trade of 1,000 shares in mid-morning trade at an intra-day high of Sh20 per share from the listing price of Sh14, but later closed at an average price of Sh16.15 on a total volume of 4,000 shares.
The sharp increase in Longhorn’s share price bucks the trend of falling market prices of recently listed stocks, although analysts said it will take time and more trades to establish an equilibrium price.
“We have to see more trades, one block trade is not indicative,” said Alistair Gould, head of trading and product development at Old Mutual Securities.
Among the top shareholders of the company whose paper wealth rose instantly by the millions are Tetu MP Francis Nyammo who is the single biggest shareholder with a 35 per cent stake and the minister for Foreign Affairs minister Samson Onegri, who has a two per cent stake in the firm.
Prior to listing by introduction on the Alternative Investment Market Segment, the firm had a Sh819 million valuation. Total assets of the company stood at Sh706 million at the end of last year.
Mr Gould said that in addition to the need to have a higher volume of shares traded, it is also important that the number of deals has to go up before the share can establish an equilibrium price.
He, however, said Longhorn Kenya’s relatively small free float of shares could make the counter illiquid, slowing down price discovery. It listed 58.5 million shares.
Majority shareholders, who own close to 70 per cent of the firm, are locked in for two years during which they will have to maintain a 51 per cent holding as per a Capital Markets Authority (CMA) requirement.
Centum Investment Company Limited is the top joint shareholder of the company with Mr Nyammo, each with 20.4 million shares equivalent to a 35 per cent stake.
The managing director, Janet Njoroge and operations manager, David Amiani Omuruli who hold 1.1 per cent (649,700 shares) and 1.5 per cent (870,000 shares) are also included in the two-year lock-in.
Longhorn shares were trading at the over the counter (OTC) market for Sh66 each prior to a one for five share split. The firm becomes the first listing of 2012.
The NSE chief executive, Mr Peter Mwangi, said that it comes a time when the market is expecting channelling of funds to the bourse spurred by the current drop in interest rates on treasury securities.
Mr Nyammo, who is also the Longhorn Kenya chairman, said that entering new markets and offering new ways to deliver books are twin revenue drivers for the stock market’s 59th firm.