Companies

Centum is considering the sale of its real estate subsidiary


Centum CEO James Mworia. PHOTO FILE | NMG

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Summary

  • Centum Investment Company Plc is considering selling some or all of its stake in its property development subsidiary Centum Real Estate Limited.
  • The proposed transaction is expected to result in significant capital gains for the company listed on the Nairobi Stock Exchange.

Centum Investment Company Plc plans to sell some or all of its stake in its property development subsidiary Centum Real Estate Limited, which was valued at 16.6 billion shillings in the fiscal year ended March.

The proposed transaction is expected to result in significant capital gains for the Nairobi-listed company, in addition to reducing the concentration of its assets in the real estate sector.

“We are open to the sale of part or all of our interest in Centum RE. We are doing this to rebalance our portfolio which is currently concentrated in real estate, ”James Mworia, CEO of Centum, told Business Daily.

“The money raised will be reinvested in marketable securities (stocks and bonds) and in private equity to achieve our allocation objective on these two segments.

The company has recently consolidated most of its real estate projects in Centum RE, comprising land and properties under development in Nairobi County, Kilifi County and Uganda.

However, the investment company continues to own Two Rivers Development Limited (TRDL) directly. TRDL in turn owns a majority stake in Nairobi’s Two Rivers Mall.

Centum held 63.5% of its 47.5 billion shillings of assets during the fiscal year ended March in real estate, exceeding its maximum target of 55%.

“We exceeded the target not because of increased investment in real estate, but because of gains in land and property,” Mworia said.

The company has invested 7.8 billion shillings in the acquisition and development of the assets comprising the Centum RE portfolio, signaling the significant capital gains it could unlock from the sale of the subsidiary which is now valued at 16.6 billion shillings.

Centum’s allocation to private equity and marketable securities, on the other hand, was 20.5% and 16%, behind the target of 40% and 20% respectively.

Centum RE paid the parent company 4.5 billion shillings in the fiscal year ended March, representing interest and loan repayments to shareholders.

“This company is on track to complete additional distributions by March 2022 thanks to a strong sales pipeline for residential projects and development rights and is well positioned for a possible exit,” Centum said in its latest report. annual.

Among the additional payments that Centum is considering from the real estate subsidiary is 1 billion shillings from the sale by the unit worth 2 billion shillings of development rights to third parties.

The proposed sale of Centum RE is a testament to the company’s confidence in improving economic performance and investor confidence compared to last year, when it suspended asset disposals amid the outbreak of the Covid-19 pandemic.


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