Longhorn writes new chapter with listing plans

Longhorn Kenya, a publishing company, is set to list its shares at the Nairobi Securities Exchange later this year, making it the first firm in the Sh12 billion industry to go public.
The company has picked transaction advisors who will prepare the details of the listing by introduction to be presented to the capital markets regulator for scrutiny and possible approval.

Longhorn CEO Janet Njoroge confirmed the plans to go public, but declined to give more details of the transaction citing Capital Markets Authority (CMA) restrictions.

“It is a bit premature to comment on it,” she said.

Late 2011, the publisher appointed NIC Capital as the lead transaction advisor, African Alliance Investment Bank as the sponsoring broker and Brightspark as the marketing and communications advisor.

Listed investment company Centum is Longhorn’s lead investor with a 35 per cent stake which it bought in 2008 for Sh241 million.

Businessman and Tetu MP Francis Nyammo is the second largest shareholder with an 11 per cent stake while Mureka Investments controls 2.7 per cent of the firm’s shares. Other top shareholders include Kamami Investments with 2.1 per cent and Text Book Centre with two per cent.

NIC Capital said more details of the listing, including the information memorandum on Longhorn’s finances and other material information, would only be released after obtaining the green light for the transaction from CMA.

“We have not received the CMA approvals so not much more can be said at this juncture,” said NIC Capital. This could be the first addition to the NSE this year, coming after last week’s announcement by CIC Insurance that it would list its shares at the exchange by introduction, which does not involve any sale of shares to the public, by the end of the year.

Clothes retailer Deacons has said it also intends to list at the securities exchange in the third quarter of this year.
The Kenya Publishers Association chairman, Lawrence Njagi, estimated that the publishing industry is worth about Sh10 billion, which tallies with African Alliance Investment Bank’s approximation of Sh12 billion.

The industry has been a major beneficiary of the government’s policy of supplying free text books to primary and secondary schools.
Longhorn’s revenues more than doubled to Sh1.1 billion for the year ended June 2011 from Sh527 million in 2010.

The growth was driven by strong sales of textbooks in Kenya and other countries in the region.

Net profits soared to Sh146 million last year, about six times more than the Sh22 million it made in the 2010 financial year.
Total assets of the company stood at Sh706 million last year.

Longhorn’s shares are trading at Sh66 at the over-the-counter (OTC) market, down from an average of Sh100 last year.

Brokers attributed the drop in share price to the depressed stock market. An African Alliance research note paints bright prospects for the publishing industry which has grown rapidly due to assured demand from the education sector.

“Free primary education and subsidised secondary education have made government the single largest buyer of text books,” said the note seen by the Business Daily.