Companies

Kirubi kin retains Sh2.1bn offer for Centum shares

Chris Kirubi

Businessman Chris Kirubi died on June 14, 2021, at the age of 80. PHOTO | NMG

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Summary

  • The family of the late Chris Kirubi says it retains the businessman’s option to buy an additional 126.8 million shares in Centum.
  • Mr Kirubi had received approval from the Capital Markets Authority (CMA) to buy a total of 133 million Centum shares.

The family of the late Chris Kirubi says it retains the businessman’s option to buy an additional 126.8 million shares in Centum Investment Company Plc #ticker:CTUM with a current market value of Sh2.1 billion.

Kirubi had received approval from the Capital Markets Authority (CMA) to buy a total of 133 million Centum shares, arguing that the market had continued to undervalue the Nairobi Securities Exchange-listed firm by a large margin.

The businessman had bought 6.2 million shares by the time of his death in June. His heirs say the offer to buy the balance of 126.8 million shares remains in place.

“The permit to buy additional Centum shares is valid and has not been withdrawn,” said Andrew Musangi, Mr Kirubi’s son-in-law and a director of the company.

“It’s premature to comment on how the family will go about the offer until succession matters pending in court are completed. The family has a strong belief in the future of Centum.”

Heirs of a deceased person are required to go through a legal process to obtain authority to run his or her estate.

The Kirubi family’s portfolio decision will follow that of the government which on July 2 transferred its 22.97 percent stake in the investment firm worth Sh2.6 billion from ICDC to its successor, Kenya Development Corporation Limited (KDCL).

The move, effected via a legal notice by Treasury Cabinet Secretary Ukur Yatani, is part of the ongoing parastatal reforms that have seen KDCL take over assets previously owned by multiple government entities.

If Kirubi’s family decides to conclude the investment plan, they will boost their interest in the investment firm from the current 30.94 percent worth Sh3.5 billion to 50 percent.

Centum’s share price closed at Sh17 yesterday, rising 21.35 percent from lows of Sh14.05 recorded on July 27.

The stock, however, still trades at a massive 72.9 percent discount compared to the company’s net asset value per share of Sh62.9 as captured in the financial results for the year ended March.

Centum is among the NSE-traded stocks that are yet to retrace the levels they were trading at before the outbreak of the Covid-19 pandemic.

The investment firm is working to close the valuation gap which it says arises from investors’ perception of higher risk and not fully understanding its business model, based on feedback received.

“To address the information gaps, our investor relations team will be enhancing the company’s stakeholder engagement for a better understanding of our business model and core values drivers,” Centum says in its latest annual report.

“We are also reviewing our financial reporting framework in line with current developments in the IFRS to simplify reports and enable the market better track and forecast the metrics that are relevant to Centum as an investment holding company.”

The investment firm says it has dealt with the risk perceptions by reducing debt and increasing investments in liquid and defensive assets, including government bonds.

Centum has also structured its operations to enable subsidiaries to borrow on their own without relying on the parent company to arrange or guarantee the obligations.

“To address the financial risk concerns, Centum embarked on debt reduction at the onset of Centum 4.0 and has since paid down long-term debt from Sh16 billion at the beginning of the strategy period to Sh3 billion at the close of full year 2021,” the company says in the report.

“Consequently, we have seen finance costs reduce by 67 percent in full year 2021.”