Kenya’s Centum pursuing sales to fund power, real estate deals

NAIROBI (Reuters) – Kenya’s Centum Investment is working on selling its stakes in several firms to fund new investments in power plants, real estate and other areas, its chief executive said.

James Mworia told the Reuters Africa Investment Summit the company, whose market value has jumped seven-fold over the last five years to 40 billion shillings ($438 million), was targeting new investments that would maintain growth momentum.

He did not mention what the sales were, adding that such transactions could take 18 months to complete.

“We have a pipeline of investments in areas with high returns and less competition,” he said, referring to the real estate and energy sectors.

In recent years, Centum moved into real estate, which now accounts for about 30 percent of its portfolio. The flagship Two Rivers shopping mall development in Nairobi is worth 9 billion shillings and will be inaugurated towards the end of 2015.

The firm has also branched out into power generation with a 20 megawatt (MW) geothermal plant due to start production this year and a 1,000 MW coal-fired plant, due to be completed in three years.

Before Mworia took over as chief executive five years ago, Centum focused on quoted equity and fast-moving consumer goods. Its other investments include the franchise to distribute Carlsberg beer in Kenya.

Half of the company’s investment portfolio consists of private equity while 20 percent is cash and marketable securities such as shares in listed firms.

Mworia said the firm liked to keep cash and securities at about a quarter of the portfolio to allow it to move swiftly on targets. “The liquidity gives you flexibility,” he said.

Centum has not paid a dividend for the past five years, a policy it intends to keep in place for the next five, to boost it war chest for investments.

In January, Centum sold its 13.75 percent stake in Kenyan insurer UAP Holdings to Old Mutual for 3.7 billion shillings, a deal that took 18 months to complete. Selling the minority stake highlighted the firm’s preference for control.

“Our strategy is to take more of controlling positions now because we can drive the value creation process as opposed to relying on other people,” Mworia said.

($1 = 91.3500 Kenyan shillings)