Centum Investments booked a Sh1 billion gain from the sale of its 21.5 per cent stake in insurance brokerage AON in February.
The Nairobi Securities Exchange (NSE)-listed company had bought the shares at a price of Sh12.2 million indicating that the investment grew exponentially in the 17 year-period it held on to it.
“We sold to existing shareholders at slightly above Sh1 billion,” said Centum’s chief executive James Mworia in a phone interview with the Business Daily.
Some of AON’s existing shareholders include parastatal Industrial and Commercial Development Corporation (ICDC ) which owns 22.3 per cent in Centum and Funguo Investments which is partly owned by ICDC.
Funguo Investments announced on Tuesday it had increased its stake in the insurance broker to eight per cent after acquiring an additional two per cent.
Funguo management told the Business Daily that their stake is valued at Sh384.8 million which supports Centum’s valuation of the company.
The deal values AON which is also involved in actuarial consulting, medical scheme administration, medical fund management, life and pension administration at Sh5 billion. The broker is part of the British global insurance broker Aon Plc.
Centum said the sale was in line with its business model of developing assets before bringing in new investors, given that it is an investment company and not a conglomerate.
The firm also has interests in real estate, energy, banking, publishing and is currently venturing into agriculture and education sectors.
Last year, it earned Sh5.2 billion from the sale of its 13 per cent stake in UAP Holdings to Old Mutual, making a gain of Sh2.8 billion over the book value of the stock.
Centum’s investment strategy points to higher returns booked by investors who look beyond listed companies.
As at the end of March Centum had invested Sh5.9 billion in unquoted companies compared to Sh1.3 billion in listed firms.
Last year, the NSE indicative 20 share index lost 21.9 per cent indicating a general loss position for most investors. Centum said it recorded a return of six per cent from its listed shares which include Longhorn Publishers.
Centum is currently setting up a leasing company Zohari which it hopes will benefit from its cash position of Sh3.9 billion as at March. It also has a 17.8 per cent ownership in General Motors, a major supplier of automobiles.
“We have access to a five-year medium term fund at competitive pricing, which enables us to be competitive because the assets tend to have a similar life,” said Mr Mworia.
The firm spent Sh1.78 billion in new acquisitions in 2014 which involved a 45 per cent shareholding in regional micro-lender Platcorp and a merger of Kisii Bottlers, Mt Kenya Bottler and Rift Valley Bottlers into an entity called Almasi Beverages.
Centum’s shares were Wednesday priced at Sh49.75 each at the bourse.