Centum’s share price reached a one-year high last week, boosted by investment decisions and the announcement of the firm’s strategic plan for the next five years.
The Nairobi Securities Exchange-listed investment firm’s shares traded at Ksh42 ($0.48), up 22 per cent since January, and 90 per cent over the past year.
Investors were happy with the firm’s announcement that it had achieved financial closure for the Ksh15 billion ($172 million) Two Rivers project, its premium real estate project.
Over the past two weeks, trading volumes hit six-month highs.
Centum said it had agreed on a $75 million deal — the highest equity purchase in Kenya this year — in which it will sell 43 per cent of Two Rivers to institutional investors.
Centum has also secured a $60 million 10-year loan from Co-operative Bank to fund its share of investment in Two Rivers, expected to open in October next year.
Last week, Centum announced a 22 per cent increase in net profit for the full year ended March 2014, attributable to growth in investment income. The company on Tuesday said it had made Ksh3.05 billion ($35 million) after-tax profit, up from Ksh2.5 billion ($28.7 million) over the same period last year.
Investors seem to be pleased with the firm’s strategic direction. The company aims to grow total assets from the current Ksh20 billion ($229 million) to about Ksh120 billion ($1.3 billion), as well as grow third-party funds under management from Ksh147 billion ($168 million) to about Ksh600 billion ($6.89 billion).
The Two Rivers project, based in Runda on the outskirts of Nairobi, will have five star and three star hotels, a hospital, residential and office space.
“We have two institutional investors — one foreign and the other local — investing in our Two Rivers development. Due to confidentiality agreements in place with each of them, we are not able to disclose who they are at this time but will be able to do so in future,” said Centum.
The firm, which last week was included in the NSE-20 Share Index, said it will sell the stake in Two Rivers in an all-equity deal, meaning that the incoming shareholders will provide the entire amount for financing the project — diluting Centum’s share — in return for the stake.
The company said it was in talks with a top hospitality chain to develop a five-star hotel at Two Rivers, and disclosed that it had closed a similar deal with another hotel chain to build a three-star hotel; construction is expected to start in September.
The mall is set to be opened in October 2015. Centum says it will be largest retail mall in sub-Saharan Africa (excluding South Africa). The mall’s anchor tenant will be Carrefour, the fourth largest retail group in the world.
Centum says that it will expand its targeted investment sectors to eight, focusing on real estate, agriculture, financial services, health, education, fast-moving consumer goods, ICT and energy.
Some of the company’s current investments don’t fall within these categories, but it says it will retain them as they continue to be valuable to the firm’s business from a value appreciation and/or cash generation viewpoint.
“We constantly review our portfolio, General Motors included, to determine which of our investments are ready for exit and which ones to continue holding. At this time, we do not have immediate plans to exit General Motors,” said Centum.
In April, the Capital Markets Authority granted consent for the registration of Centum Unit Trust Fund as a Collective Investment Scheme, enabling the firm to widen its client base.
The permit will see Centum Asset Managers Ltd operate four subfunds namely Africa Equity Fund, Africa Balanced Fund, Africa Fixed Income Fund and Africa Money Market Fund.
The fund plans to enter into other African markets, where growth of between five and seven per cent promises investors returns superior to those in other markets.
The licensing of Centum brings to 18 the number of collective investment schemes. Centum has been eyeing the regional market, and is investing $22 million in a luxury marina project in Entebbe, Uganda. The company invested more than 50 per cent of its portfolio outside Kenya between 2009 and 2014.