NAIROBI, Kenya, Jan 14 – Centum Investment Company has announced plans to raise additional capital by tapping into the debt capital markets subject to regulatory approval.
Centum Investment Managing Director James Mworia said the funds could be raised in the form of a Corporate Bond and will be used to take advantage of opportunities created by the global economic downturn.
“I cannot divulge any details so far but will be making the announcement in February on how much we will be seeking to raise and within which time period we will be seeking to do this,” Mr Mworia said.
He said the total figure needed will become apparent once the company’s strategic plan is ready.
“Centum’s balance sheet is strong at over Sh8.4 billion and with no debts. But to make good gains we need to leverage it by acquiring debt through borrowing,” he explained.
Mr Mworia said this fact has placed the investment company at a huge advantage at a time when valuations are coming down, investment opportunities increasing and traditional local and foreign investors who compete with Centum for opportunities are scaling back.
Speaking after the company’s Annual General Meeting on Wednesday, he explained that the current global financial crisis had created an excellent opportunity for the company to increase its investment activity and expand its foot print within sub-Saharan Africa.
“We are not going to be bound by geographical boundaries but the opportunities that will present within the region and so far we have seen opportunities in financial services, manufacturing and in the power sector,” Mworia stated.
Mworia explained that though the Nairobi Stock Exchange had lost 32 percent of its value last year, Centum lost lower at 30 percent adding that whereas portfolios of most private equity firms were hurting, Centum’s portfolio companies had done very well owing to the unique competitive advantages they posses and their limited exposure to debt.
“Centum sees enormous opportunities in the market for buyouts, investment of the growth capital and recapitalisation of over-leveraged balance sheet across sub-Saharan Africa,” he said.
Meanwhile the firm is expressing confidence that its investment in the struggling Rift Valley Railways (RVR) was worth its while.
Centum Investment Manager and Company Secretary David Owino explained that the investment into RVR stands at only four percent which would be minimal loss if the concessionaire does not succeed.
“If worse comes to worst, for example, the government revokes the concession for whatever reason our portfolio might move from Sh8.4 billion to Sh8 billion, so its just four percent and we are in the regions of making profits of Sh1 billion and over. Most of our company’s performances record 25 percent in earnings year on year so it’s a hit we can take and still pay dividends,” Mr Owino explained
He further pointed out that the company was having meetings and talks with government to ensure that all is well.
“Our investment in RVR is about Sh350 million and we have shares outstanding 550 million shares so on a ‘per share basis’ this loss will be approximately 60 or 70 cents,” Mr Mworia reiterated.
He further noted that infrastructure investments are of a long term nature and they sometimes face such difficulty.