Chris Kirubi’s intention to buy more shares in Centum worth Sh900 million has pushed the stock to a five-year high.
The investment firm’s shares traded at Sh27.5 on Friday, a day after the billionaire investor announced he will buy an additional 32.65 million share equivalent to a five per cent stake in the company.
The Sh27.5 level was last seen in July 2008 and is up Wednesday’s close of Sh24, making it the best performing stock at the Nairobi bourse over the past year with a gain of 133 per cent over the period.
“Centum added another 7.8 per cent as investors bought into the investment firm on the news that the largest shareholder was looking to increase his shareholding in the company,” Standard Investment Bank said in a statement.
Mr Kirubi is the largest shareholder in Centum with 24.99 per cent and the targeted share purchases will push his ownership to 29.9 per cent.
The share price gain has seen the value of Mr Kirubi’s shares in the company rise by over Sh300 million in the two days to stand at Sh4.5 billion.
The investment firm does not pay dividend since it prefers to re-invest profit into the business — making its share movement at the Nairobi bourse a critical tool for investors eyeing capital gains.
The firm paid a dividend of Sh0.40 in 2008 and told investors last year that its strategy of reinvesting profits will go beyond 2014. This means that Mr Kirubi is seeking capital gains.
Mr Kirubi’s accumulation of Centum’s shares is seen as a vote of confidence in the investment firm which has raced to diversify and reduce the influence of the NSE on its performance.