Billionaire Kimani buys Sh219m shares in Centum

Billionaire investor John Kibunga Kimani has acquired additional shares in Centum Investment Company worth Sh219.7 million, raising his stake at a time when the firm’s share price fell to new lows.

Regulatory filings show that he had built his stake to 4.7 per cent or 31.2 million shares in the first week of August this year, up from 1.24 per cent or 8.2 million shares on March 31, 2021.

The increased share purchases have seen him rise one place to rank as Centum’s third-largest shareholder after the State-owned Kenya Development Corporation and the estate of the late entrepreneur Chris Kirubi, which maintained their ownership at 22.97 per cent and 30.94 percent respectively.

Dr Kimani bought the additional shares in a period when the stock had continued its decline to trade at a range of between Sh17.2 and Sh8, according to market data.

Centum says its true value is substantially higher than its market capitalisation, updating its net asset value per share at Sh62.1 as of March.

This indicates that the stock is trading 84.6 per cent below the company’s book value. Centum’s share price decline has been attributed to the long-running bear market on the Nairobi Securities Exchange.

Investors had also been worried about its debt levels and concentration of assets in real estate, with Centum moving to address these issues by paying off loans and looking to sell a stake in its subsidiary housing its investment properties.

Centum is now among the major stock market investments for Dr Kimani who typically invests for the long term.

Centum narrowed its net loss two percent to Sh1.33 billion in the year ended March as weaker performance in its Two Rivers real estate asset offset improved profitability in other divisions.

The firm had posted a net loss of Sh1.36 billion the year before.

Centum has raised its dividend payout in a move that will boost returns for shareholders who are sitting on major paper losses after the company’s stock declined over the past three years to trade at Sh9.54 on Wednesday.

The share price has recovered 22 per cent from the record low of Sh8 recorded on July 27.

Centum said the dividend payout is based on its policy of distributing 30 per cent of the returns from its cash holdings.

The company made a strategy change to invest a significant part of its capital in fixed income securities to lower its risk and generate a guaranteed minimum amount of cash, part of which can be distributed as dividends.

Centum’s loss from Two Rivers Development Limited widened to Sh1.98 billion from Sh1.85 billion due to reduced sales and investment income. The company is in the process of restructuring the debt of the business.

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Editor's Note: The story has been revised to remove a statement indicating Centum CEO James Mworia had sold some of his shares in the company. He has not made any sales in the period referred to in the article.