The East African (Nairobi)

30 November 2010

East Africa: Centum Ventures Into High Return Markets

Nairobi — Centum Investment Company has injected $18.75 million into real estate in Kenya and Uganda.

The acquisitions are in line with the company's strategy to raise capital from the existing balance sheet and venture into high return markets to reduce debt financing. "There is a shortage of available land for developers. We have acquired 100 acres in Nairobi and 300 acres in Uganda, to be sold by the second half of next financial year," explained Centum chief executive officer James Mworia at an investors' briefing last week.

The company expects a windfall from the estates in lucrative areas of Runda in Nairobi and Entebbe in Uganda. Other forms of financing targeted to raise $375 million of assets by 2014 include sale of shares, debt financing at project level, third party financing and partnership with developers.

In September last year, the company had planned to raise $25 million through a bond but the interest rate at over 12 per cent did not favour the company. "We shall use the banks at an interest rate of nine and get a loan," Mworia said although he did not disclose the banks to borrow from.

The company made an after-tax profit of $10.5 million up from $912,500 last year a growth attributed to portfolio management that saw the company dispose of underperforming assets worth $12.5 million and accumulate investments at $32.5 million compared with last year's $15 million.

"Investment activities in the six months were more than the activities over the past three years," explained Mr Mworia. Total assets stood at $149.7 million reflecting a 25 per cent increase over the past six months in line with the company's course of growing assets under management to $375 million and having 50 per cent of its portfolio invested outside Kenya.

Centum proposed to cross list on Uganda Securities Exchange and expects approvals by December so as to cross list in January. The company has established a 21 per cent geographical exposure in Uganda compared with Kenya's 79 per cent.

Centum follows in the footsteps of other Kenyan companies rushing to reap from Uganda's growing economy expected to hit 10 per cent in 2011, almost twice as Kenya's projected 5.2 per cent.

It would be the seventh firm to crosslist on USE after Nation Media Group, Kenya Airways, East African Breweries, Kenya Commercial Bank, Equity Bank and Jubilee Insurance.

The common market has also made it easier for the companies willing to invest across the region and Centum hopes to tap into regional market of Tanzania, Rwanda and Southern Sudan. "EAC facilitates flow of capital within the region and we won't be left behind in regional investments," added Mr Mworia.

Ugandans continue to have a variety of companies to invest in as competition stiffens with USE gaining greater weight over the past few years as more equities crosslist on it from Nairobi Stock Exchange and local companies place bonds to raise capital for expansion.

Meanwhile, Rwanda's Stock exchange market is set to compete with other regional bourses after the market's committee offered a single price to regional investors seeking to buy shares in Bralirwa during its initial public offering launched last week. Rwanda's largest brewer and soft Beverage Company's IPO has allocated 70 per cent of the total stock to EAC while foreign investors scramble for 30 per cent.

"We have a very clear allotment policy and by the EAC Common Market Protocol that was signed this year, we shall have to consider the EAC investors as local investors," Rwanda Capital Markets Privatisation Committee chairman Vincent Munyeshyaka said.

Bralirwa paid 100 per cent of its profits to shareholders, a move seen to woo more investors in to the company shares. Nation Media Group and Kenya Commercial Bank are the only Kenyan firms cross-listed on Rwanda's stock exchange.

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