TransCentury has invested Sh1 billion in engineering firm Civicon Group as it races to capture multi-billion shilling mining deals.
The Nairobi bourse-listed investment company disclosed in its latest annual report that Civicon will use the cash to buy heavy equipment for construction works in the region mining and oil gas.
The firm is shifting its focus to mining, oil and gas exploration and infrastructure developments (power lines, road and water facilities) to shape its future growth.
“Engineering division invested over Sh1 billion, which went towards heavy equipment to support new projects predominately in Kenya and DRC,” says TransCentury in the report.
Foreign investors are pouring billions of shillings in oil exploration across East Africa while governments are also revamping power, road and their water networks, paving the way for firms like Civicon.
This informed TransCentury’s purchase of a 63 per cent stake in Civicon Limited, a regional engineering and logistic firm, last year to get a piece of the lucrative sectors. The Civicon deal was worth $36 million (Sh3 billion) and included a share swap restructuring.
Civicon has operations in Kenya, Rwanda, South Sudan and Uganda, where it has built roads, petroleum refineries, breweries, laid oil pipelines and is now on oil exploration.
The Civicon purchase helped TransCentury diversify its business which has been concentrated in the power sectors, especially with East African Cables, where it has a 63 per cent stake.
It sales grew to Sh13.8 billion from Sh10.7 billion with Civicon accounting for 49.3 per cent or Sh6.8 billion. This reduced the contribution of EA Cables to the revenues of the investment firm to 31 per cent from 46 per cent in 2011.
Civicon’s contracts include the Sh3.2 billion deal to rehabilitate access roads for the Lake Turkana Wind Power Project, upgrade of Kenya Petroleum Refineries and Sh2.6 billion construction of an oil terminal in Mombasa. Its clients include East African Breweries, KenGen and Tullow Oil.
But TransCentury reckon that Civicon will emerge its main profit drive once the contracts its handling enter maturity phase.
Its focus on mining and oil and gas business comes as the investment firm cuts its interest in other sectors like real estate. The firm last year sold prime land in Nairobi, signalling its lower appetite for real estate as it focuses on the region’s power and infrastructure deals.
TransCentury had earlier indicated of plans to build a mall with commercial office space of 24,000 square meters on a six-acre plot in Karen, which has not been listed among its assets in its latest annual report.