Longhorn puts up for sale Sh500m head office property
What you need to know:
- Sale of the 2.2-acre land in Nairobi’s Industrial Area is expected to be concluded in six to 12 months, after which the publisher will rent space for its head office.
Longhorn is set to sell its head office for an estimated Sh500 million to finance the publishing company’s investment in local and regional expansion.
Sale of the 2.2-acre land in Nairobi’s Industrial Area is expected to be concluded in six to 12 months, after which the publisher will rent space for its head office.
“Subject to the company complying with all relevant laws and regulations, the shareholders of the company do hereby approve and authorise the sale … of all that property known as LR 209/5604,” reads a special resolution to be put before Longhorn’s shareholders at the October 28 annual general meeting.
The Nairobi Securities Exchange-listed firm spent Sh155.4 million on building the headquarters.
The property is currently valued at Sh230.3 million in the publisher’s books, reflecting capital gains over the years — with an additional premium to be added on this amount in the sale.
Chief executive Simon Ngigi said the land sale is informed by the need to increase investments in higher-return publishing fields.
“The land sale is part of our strategy to get rid of idle assets. We have more opportunities in our publishing business that will generate higher returns faster than just holding the property,” he said.
“We will move our head office to an upmarket location to suit our corporate profile,” he said, adding that the location is yet to be determined.
Mr Ngigi said the company expects to raise about Sh500 million from the land sale.
The head office is the only immovable property owned by the company which is aggressively investing in its core publishing business in Kenya and the region.
Its latest investment is the acquisition of a 92 per cent stake in LawAfrica Publishing Limited, a private East Africa-focused legal content publisher, for Sh125 million.
Longhorn first bought a 67 per cent stake in the company in June and acquired the additional shares thereafter.
LawAfrica publishes legal and related information books and materials in Kenya, Uganda and Tanzania and has three wholly owned subsidiaries operating in the three countries.
Mr Ngigi said Longhorn intends to venture into more markets in the next two years in line with its ambition of becoming a pan-African publisher.
The company currently has a direct presence in seven countries including Tanzania, Uganda, Malawi and Rwanda.
The company also sells books and other learning materials through distributors in countries such as Ethiopia, Senegal and the Democratic Republic of Congo.
The expansion plan, including acquisitions and development of new learning materials, is partly financed by the recent rights issue which raised Sh530 million.
Longhorn has earmarked Sh200 million from the cash call to be deployed in entering new geographical markets in a strategy aimed at reducing its reliance on Kenyan sales.
A similar sum is to be spent on launching new products, including story books and college textbooks.
The company is investing the remaining Sh100 million in developing proprietary e-learning platforms including smartphone apps as part of its drive towards digital educational content.
Longhorn recorded a 45.1 per cent net profit jump to Sh104 million in the year ended June, with sales rising 77 per cent to Sh1.5 billion in the review period.
