Kirubi builds Sh1bn war chest for Centum shares

Billionaire investor Chris Kirubi is building a Sh1 billion war chest to acquire additional shares in Centum Investment.

Mr Kirubi on Thursday issued a notice to buy 32.65 million additional shares in Centum Investment that are currently worth Sh832.8 million, pushing his ownership to 29.9 per cent from 24.99 per cent.

The move is seen as a vote of confidence in the investment firm which has raced to diversify and reduce the influence of the Nairobi Securities Exchange on its performance in recent years.

“Dr Kirubi proposes to acquire up to a maximum of an additional 32,659,909 ordinary shares of Sh0.5 each of Centum from the secondary market,” said the businessman in a notice.

“Dr Kirubi does not intend to make a takeover offer for Centum and has applied to the Capital Markets Authority…for an exemption from complying with the requirements to make a takeover.”

The regulator requires investors who own more than a quarter of a Nairobi bourse-listed firm to state whether they intend to take full control of a company when buying stocks equivalent to at least five per cent in it. The shares Mr Kirubi is targeting in Centum are equivalent of five per cent stake.

The businessman’s shares in Centum are currently valued at Sh4 billion, with the looming transaction set to raise his stake in the investment firm to nearly Sh5 billion.

On Thursday, Centum shares stood at Sh25.50 up from Wednesday’s close of Sh24 and stock brokers reckon that Mr Kirubi will need more than Sh1 billion to amass the new shares on account of the stock appreciation.

This is the second time Mr Kirubi will be raising his stake in Centum over the past five years, arguing that the company’s heavy investments in real estate and new sectors like power generation will boost its earnings going forward. He bought 6.6 million shares in Centum in the nine months to January.

(READ: Kirubi raises stake in Centum for first time in five years)

Centum’s share price has more than doubled over the past one year compared the NSE-20 Share Index that has gained 24 per cent in the same period to 4,728 points.

“There is a lot of value in Centum. If you offered me a price of Sh100 for each of Centum’s shares, I would not sell to you,” Mr Kirubi said at the firm’s a recent investor briefing.

Centum has a portfolio of over Sh19.3 billion invested across asset classes, from blue chip companies like Nairobi Bottlers, UAP Insurance, and General Motors to prime residential land in Nairobi and unlisted firms.

The investment firm does not pay dividend since it prefers to re-invest profit into the business — making its share movement at the Nairobi bourse a critical tool for investors eyeing capital gains.

The firm paid a dividend of Sh0.40 in 2008 and told investors last year that its strategy of reinvesting profits will go beyond 2014. This means that Mr Kirubi is seeking capital gains in Centum in the medium term.

The investment firms has closed a number of deals recently including the purchase of a 45 per cent shareholding in Platcorp Holdings, the holding company of micro-credit organisation Platinum Credit.

This week it announced it is buying up to 73.35 per cent in fund manager Genesis Kenya that oversees a portfolio of over Sh100 billion.

Mr Kirubi has interests in UAP Holdings (9.58 per cent), Haco Tiger Brands (51 per cent), Capital FM, and a string of listed firms such Nation Media Group, Standard Chartered and KCB.