NAIROBI, Kenya Aug 2 – Investment firm TransCentury says it intends to raise $45 million (Sh4.1 billion) through bonds to fund its expansion plans in the region.
The money will be used to additionally invest in its existing business lines especially in the transport and power sectors.
TransCentury Chief Executive Officer Gachao Kiuna said on Tuesday that of principal consideration would be its investment in Rift Valley Railways (RVR), in which it is expected to put an equity injection of $28 million into the business.
“RVR equity commitment is a dollar of equity for every two dollars of debt so what we will do is be prudent with how we go about it,” Dr Kiuna said.
He was speaking on the sidelines of the signing of a concessional loan agreement totalling $164 (Sh15 billion) that will be invested into RVR.
Among the companies under the firm’s portfolio, include East African Cables, Tanelec Limited in Tanzania, Kewberg Cables (South Africa), Chai Bora (Tanzania) and Avery East Africa.
With the demand for power growing across Africa, Dr Kiuna said the firm sees immense potential to exploit through its cable companies that manufacture power, armoured and data cables as well as aluminium conductors.
It has four plants in Kenya, Tanzania, the Democratic Republic of Congo and South Africa, where it owns Kewberg Cables. The company also operates a transformer factory in Tanzania, which produces switchgears used in power facilities.
TransCentury also has plans to invest in Nigeria as part of its Africa expansion strategy.
“We want to invest in areas where there is a lot of under penetration i.e. where there is a lot of demand but for some reason there hasn’t been enough supply of that service which is very clear in the power space,” he said.
The firm, which posted an after tax profit of Sh468 million for its full year in 2010, expects its performance to be higher this year as its investments begin to mature.
“We have had a lot of expansion across the group; so we’ll start seeing those coming through so we do really expect a better performance than last year,” Dr Kiuna said.
With the discovery of oil in Uganda and Southern Sudan, Dr Kiuna said both markets provide an opportunity in the energy space. He however said that investment in that line would be informed by the performance of businesses operating there before moving in.
“We go into business where there are clear customers, demand for the product and we are competitive and the only risk we are taking is execution in turning around that company rather than taking the initial technology and drilling risks,” Dr Kiuna said.