Mr Chris Kirubi, a director of Centum. The firm is looking at the energy sector as it seeks to diversify its business. FILE
What you need to know:
Centum has incorporated Mvuke Power Ltd, a subsidiary registered in Mauritius that will hold its investments in power generation and distribution.
The company is expected to back the projects financially either through equity stakes or loans.
Centum has created an investment vehicle to spearhead its venture into the local and regional power sector as the firm diversifies its business.
The company has incorporated Mvuke Power Ltd, a subsidiary registered in Mauritius that will hold its investments in power generation and distribution.
Centum made the disclosure in a notice ahead of its 46th AGM on Wednesday where shareholders will consider the ratification of the new subsidiary among other newly created units.
The company’s main investments are in the beverage, automotive, food, and insurance sectors but it foresees huge growth opportunities in the capital intensive power industry.
“The power sector is profitable and important for us,” said Chris Kirubi, a director of Centum.
“We are eyeing the local geothermal projects in the short term but are also open to invest in other power ventures across the region.”
Mr Kirubi added that the size of investments in the power sector would depend on the specific projects to be undertaken.
Centum is expected to back the projects financially either through equity stakes or loans.
The government is also spending billions of shillings to generate more power and hook a larger portion of the population to the national grid, opening opportunities to financiers, engineers, and suppliers of power cables and equipment.
The power generation and distribution are carried out by State-owned firms Kenya Power, KenGen, Geothermal Development Company, and the Kenya Electricity Transmission Company (KETRACO) along with a number of Independent Power Producers.
Centum will join Transcentury, another investment firm, which has increased its stake in the power sector where it draws a large part of its earnings.
Transcentury serves the power sector mainly through its subsidiary East African Cables (EAC) that supplies electric cables and other equipment to regional utility firms, including Kenya Power.
Transcentury’s operating profit from its power division more than tripled to Sh521 million in the year ended December, accounting for 43 per cent of its pre-tax profits.
Expansion of electricity penetration is set to benefit firms like Centum by providing more opportunities for them to invest in power generation and distribution.
Kenya’s installed electricity capacity now stands at about 1,658 megawatts (MW) against peak demand of 1,221MW. But a heavy reliance on hydro power generation often pulls total production capacity down to below peak demand during dry seasons, forcing the injection of up to 120MW of expensive thermal power.
Peak electricity demand is projected to grow to 15,066MW by 2030, with the government expecting the country’s electricity capacity to hit 17,764MW by that time.
Currently only 30 per cent of Kenyans have access to electricity, according to official estimates. The government has set a target of providing electricity to half of Kenya’s population by 2030 as part of its long-term development plans.
Centum is looking at the supply gap to diversify its business. The firm’s key investments include equity stakes in UAP Insurance, General Motors East Africa, and Coca Cola bottling plants under the banner of Almasi Beverages.
The investment firm has also incorporated a new subsidiary, Two Rivers Lifestyle Centre Ltd, to hold some of its investments in the property market where it is a new player.
It will now hold its investment in soft drinks and alcohol manufacturers through the newly created Liberty Beverages Ltd. Centum has a 43.5 per cent stake in Almasi Beverages that was recently created after the merger of three Coca Cola bottlers.
The investment firm also has a 26.4 per cent stake in Kenya Wine Agencies Limited (KWAL) which deals in several liquor brands.
Centum’s share price has gained 37 per cent in the past six months to trade at Sh24, with the firm’s net profit for the year ended March more than doubling to Sh2.5 billion.
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