Centum set to earn 8,000pc gain from sale of Kwal stake to Distell

Investment firm Centum #ticker:ICDC is set to book a gain of more than 8,000 per cent from the sale of its minority stake in Kenya Wine Agencies Limited (Kwal) to South African brewer Distell.

READ: Viceroy owners acquire more shares to gain control of Kwal

Centum, which has in recent years stepped up its divestiture from firms it does not control, on Tuesday announced it is selling its 26.43 per cent stake in Kwal in a deal that will see Distell’s ownership rise to a majority 52.43 per cent.

Distell spent Sh834 million to acquire its initial 26 per cent stake in Kwal in 2014, indicating that Centum’s divestiture from the alcohol maker will earn it at least Sh1 billion, boosting its bottom line.

This means that Centum, which spent Sh12.2 million to buy the minority stake in Kwal in 1977, is set to book a gain of more than 8,000 per cent from this transaction. “Going by the last transaction details, we estimate the additional stake to be acquired by Distell could be valued at between Sh800 million and Sh1 billion,” Standard Investment Bank (SIB) said in a brief to investors.

Centum declined to disclose the exact transaction amount.

In 2015, Centum earned Sh5.2 billion from the sale of its 13 per cent stake in UAP Holdings to Old Mutual, making a gain of Sh2.8 billion over the book value of the stock.

Last year, the firm booked a Sh1 billion gain from the sale of its 21.5 per cent stake in insurance brokerage AON.

These divestitures also free up capital for Centum to channel to cash-hungry investments like the Two Rivers property development.