Longhorn Publishers warehouse in Nairobi. The firm’s board of directors approved its listing plans on Friday. Photo/File
Shareholders of Longhorn Kenya are on Wednesday expected to get a feel of the market’s valuation of the company, which is set to become the first publisher to be listed on the Nairobi Securities Exchange (NSE).
The publisher is expected to list by introduction at Sh14 per share, valuing it at Sh819 million on its debut based on its 58.5 million issued shares.
Newly listed shares are expected to fluctuate beyond the ten per cent share price change limit on the first day of trading, to help the market establish a valuation for new stocks.
It will be listed on the Alternative Investments Market Segment of the bourse, which comprises of counters that are relatively smaller than those listed on the main board.
The listing comes at a time of uncertainty in the stock market due to shrinking economic growth and worsening crisis in Europe, a major export destination for Kenya’s goods and biggest source of tourists.
“Nonetheless, the market will be looking forward to the listing of Longhorn shares,” said Sterling Capital in a market outlook research note.
Analysts said interest rates are set to fall even further despite the Central Bank of Kenya maintaining the policy lending rate at 18 per cent.
Treasury bill rates have already dropped below 10 per cent, and a sustained fall is expected to drive investors away from the bonds market to the stock market.
Low interest rates could also spur more rights issues by listed firms.
Eric Musau, a research analyst at Standard Investment Bank, said that listings and rights issue in the 2012 pipeline should flow uninhibited as large buyers, such as investment funds, begin to offload competing investments such as Treasury bills in favour of equities.
“Interest rates are declining the money invested in fixed income securities will go somewhere,” said Mr Musau.
The government’s syndicated loan of $600 million loan is also expected to wane the appetite for borrowing from the market, further making the case for investing in stocks.
“The general market outlook remains positive as yields on treasury securities head to single digit. Lower returns will occasion lower demand for the government papers; instead channelling the money flow to the Equities,” said a Sterling Capital Report.
Diamond Trust Bank and Standard Charted Bank have announced plans of raising funds through rights issues.
Wednesday’s listing will coincide with announcement of the Kenya Airways rights issue subscription level.
The share sale was expected to test the depth of the capital market, given that the national carrier was targeting Sh20.7 billion, the largest cash call ever in the region.
“Equally, KQ will be on the spotlight ahead of the Rights issue results announcement results on the same day (today),” said the Sterling Capital report.
The airline’s share price had dropped to Sh13.50 from the Sh14 offer price during the offer, casting doubts on the likely success of the rights issue.
The stock has since climbed to the Sh16 range on expectations of increased earnings after Virgin Atlantic, its competitor, announced that it will pull out of the Nairobi-London route this September.
The International Finance Corporation, the Treasury and KLM all committed to take part in the tights issue, guaranteeing at least 59 per cent uptake of the offer.
The Treasury owns 23 per cent of the national carrier and Dutch airline, KLM has a 26 per cent stake.
