Yesterday, Longhorn Kenya Limited began trading on the Nairobi Securities Exchange. The shares, with a par value of KES 1 were sold at a listing price of KES 14 by introduction. That may explain why most of us did not know about the listing of the shares. The company listed 58.5 million shares on the market.

An introduction by listing means that the shares to be listed are already in issue and hence no new capital is raised. In the Longhorn case, the listing by introduction will go a long way to boost the liquidity of the company, making the shares tradable in an over-the-counter way. In the Chairman’s Statement of the Listing Memorandum, Hon. Francis Nyammo cites the availability of the shares to others who want to share in the Longhorn dream of “expanding minds” through reading. He goes on to say that existing shareholders will benefit from price discovery as well as improved liquidity of the shares. Price discovery is all about finding the price of an asset,  in this case, the Longhorn shares, through the interactions of buyers and sellers. Think of an auction; the prices that the buyers and the sellers keep shouting out all depend on the supply of the good or service on sale and eventually, the buyers and sellers will settle on a certain price. The existing shareholders of the company would benefit if the share price settles at a price higher than they bought them for. Aside from the price discovery and the liquidity of the shares, the company and its shareholders also stand to benefit from the improved reputation and the branding benefits of being listed on the stock market.

The current major shareholders of the company are Centum Investment Company Limited (also listed on the NSE) with 20.4 million shares, , Pacific Futures and Options Limited that owns 14.004 million shares and Francis Thombe Nyammo, the current Chairman, who owns 6.4 million shares. Together, the three hold 69.8% of the total shareholding in the company. The major shareholders have a lock-in period of 2 years, during which period their total shareholding will not reduce below 51% of the shareholding. We at Pesatalk will keep our eye on the share and keep you posted on all events and occurrences surrounding the Longhorn shares.