Centum Investment Company Ltd (NSE:ICDC) has acquired more shares in Longhorn Kenya Ltd (NSE:LKL) to push up its equity ownership in the publishing company to 60%. Longhorn’s recent rights issue provided Centum with the opportunity to tighten its grip in the company.
Rights issue
As part of its fundraiser efforts to fund revenue growth and expansion into new markets, Longhorn recently performed a right issue at which it targeted to raise Sh530 million through the issuance of 126 million new shares to existing shareholders. But the company exceeded its target by raising Sh533 million.
As part of its fundraiser efforts to fund revenue growth and expansion into new markets, Longhorn recently performed a right issue at which it targeted to raise Sh530 million through the issuance of 126 million new shares to existing shareholders. But the company exceeded its target by raising Sh533 million.
The rights issue offered shareholders the opportunity to purchase 0.86 of a share of Longhorn for every share of the publisher they already owned. Usually, shareholders who fully exercise their rights get the opportunity to purchase additional more shares by utilizing the unexercised rights.
Centum Investment Company Ltd (NSE:ICDC) took advantage of the Longhorn rights issue to acquire 118.3 million more shares after pumping Sh390 million into the publishing company. With that, Centum raised its equity holding in Longhorn to more than 164 million shares, thus giving the majority ownership of 60% in the company.
Centum previously owned 45.7 million shares in Longhorn, giving it a stake of just about 31%. Despite the latest investment giving Centum majority control of Longhorn, but the firm recently notified the regulator, Capital Markets Authority (CMA), that it had no plans of taking full control of the publisher.
What kind of a company is Longhorn?
Longhorn is a legacy publisher trying to live in the digital age. The company reported a 70% jump in profits to Sh67.8 million for its fiscal 2016 half-year ended December 2015. Sales in the half-year period increased 57% over the corresponding period in the prior year.
What about future growth?
Longhorn management said they would use the more than Sh530 million raised through the rights issue to accelerate the expansion of the company into more markets. The publishers target markets outside the East African region include Malawi, Zambia, Zimbabwe, Ethiopia and Ghana. The company is also hoping to capitalize on the digitization of Kenya’s education system through the government’s rollout of laptops and tablets to primary school pupils.
As an investment firm, Centum Investment Company Ltd (NSE:ICDC) identifies and acquires stakes in promising businesses to increase the value for its shareholders. The firm targets both listed and non-listed companies.
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