Centum Investment Company’s gamble to buy the Matiba family’s stake in industrial gas manufacturer Carbacid has netted the private equity firm Sh782 million in two years.
Centum announced Wednesday that it had sold off the 22 per cent stake it acquired in a private share transfer in May 2009.
Centum bought the Carbacid shares, which were then suspended from trading at the Nairobi Stock Exchange (NSE) for Sh418 million.
“Over the two years this investment has generated Sh1.2 billion in dividends and disposal proceeds,” said Centum chief executive James Mworia in a statement Wednesday.
Centum had made a holding period return of 190 per cent.
Carbacid shares were suspended from trading in 2005 following a botched take-over plan by BOC Kenya, the firm’s main rival in the industrial gas manufacturing business.
A key condition in the original BOC-Carbacid transaction sanctioned by CMA had stated that up to 80 per cent of Carbacid shareholders had to back the takeover deal, but only owners holding 71.0 per cent supported it.
The Capital Markets Authority (CMA) went to court to block the transaction that could have seen BOC become Kenya’s biggest industrial and hospital gas producer.
The regulator later gave Centum, a private equity firm, the green light to buy 2.5 million shares or a 22 per cent stake in Carbacid Investment from Alliance Nominees in September — a holding company owned by politician Kenneth Matiba’s family, which is believed to have scuttled the original deal after it refused to sell its stake.
Mr Mworia said Wednesday the divestiture from Carbacid was driven by the need to raise funds to invest in other opportunities that have the promise of delivering even better returns.
“We still believe that Carbacid has very strong business fundamentals, which are underpinned by an expected expansion of the beverage sector and the strong economic growth in the region,” said Mr Mworia.
He said Centum had “a pipeline of opportunities across Sub-Saharan Africa and it is important that we rank the return potential of our existing investments against that of potential investments.”
Centum is listed on the NSE and the Uganda Securities Exchange.
It has diversified investments in quoted private equity, private equity, real estate and infrastructure business lines.
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