Centum Investment Company Plc has opened its share buyback offer after receiving the nod of its shareholders for the share repurchase exercise on Friday.
The offer to buy back 66.5 million shares by the company which opened on Monday is expected to run across an 18-month period to August 8 next year.
The share buyback was widely supported by the company’s shareholders at last week’s extraordinary general meeting with 98.59 percent of votes by shareholders supporting the initiative.
Centum’s management which has set aside Sh600.8 million to finance the buyback is betting on the programme to stabilise the company’s share price and market valuation.
“The share buyback is expected to provide liquidity to shareholders who may not have been able to trade due to the current depressed market conditions,” Centum’s chief executive James Mworia told shareholders.
“It will reward long-term shareholders whose net asset value per share will improve as a result of the reduction in shares.”
The company has set the maximum share purchase price at Sh9.03 and the minimum at 50 cents.
Beyond the shareholder nod, Centum has the approval of the Capital Markets Authority to expand shares purchased in the program beyond the 25 percent daily-volume cap.
The exemption by the capital markets regulator is crucial in allowing Centum to attain the share buyback target within the 18-month window as Centum’s daily traded volumes are mostly below 100,000.
The share repurchase program is open to all shareholders irrespective of size but is subject to the maximum buyback size.
Centum’s floating shares are expected to reduce to 598.9 million at the end of the buyback exercise.
The board of Centum has reserved the right to terminate the buyback on conditions including when the program is no longer deemed to be in the best interest of the company, changes in economic and market conditions and the incidence of a material change in the firm’s financial position.
On Monday, in excess of 500,000 Centum shares were traded, marking a huge increase from the normal volumes.