Centum #ticker:ICDC has booked a gain of over Sh1 billion from the sale of its stake in regional micro-financier Platinum Credit in a transaction that is set to boost the investment firm’s full-year earnings.
The NSE-listed Centum, whose financial year closes end of this month, invested in Platinum Credit in December 2012 with purchase of a 36 per cent stake for approximately Sh800 million.
This stake was thereafter diluted to 33 per cent following the entry of a new investor and again early last year when Centum sold eight per cent, booking a Sh432 million gain from the transaction.
Centum on Monday announced the sale of the remaining 25 per cent to the lender’s management and a current shareholder of Platcorp Holdings, Platinum Credit’s parent company, for an undisclosed amount.
“The sale of our stake will lead to increased management ownership of the business, an affirmation of their continued confidence in the business,” Centum CEO James Mworia said in a statement.
The divestiture from Platinum is set to earn Centum well over Sh1 billion, according to people familiar with the transaction, making this one of their most profitable ventures yet.
Platinum Credit is a 15-year-old company which offers emergency loans to over 80,000 customers in Kenya, Uganda and Tanzania. The lender, which promises loan approvals in under 24 hours, is positioning itself as an alternative to commercial banks that have increasingly shied from lending to “risky” customers in the wake the interest capping laws.
Centum, whose investments are spread over various sector including banking, energy, education, agriculture and real estate, has over the past five years exited several firms in which it is not a significant shareholder.
The firm in 2015 sold its stake in UAP Holdings to Old Mutual, making a gain of Sh2.8 billion over the book value of the stock. The following year, Centum booked a Sh1 billion gain from the sale of its 21.5 per cent stake in insurance brokerage AON (now Minet Kenya).
The firm also booked Sh1.1 billion gain from selling its stake in Kenya Wine Agencies Limited (Kwal) which, alongside the initial Platinum Credit share sale, boosted its bottom-line.
These two divestiture gains helped mitigate a drop in income as well as free up capital for cash-hungry ventures. Centum’s net earnings declined 16 per cent to Sh8.3 billion in the year to March 2017.
“The proceeds of the (Platinum Credit) sale will enable us to deploy capital in other investment opportunities in our pipeline across our various focus areas,” Mr Mworia said on Monday.