Companies

Centum sells Sh12bn assets to reduce real estate risks

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Centum’s chief executive James Mworia. FILE PHOTO | NMG

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Summary

  • The company says in its latest annual report that it will sell real estate assets worth Sh2 billion by March next year.
  • The biggest property disposals are planned over the next three years and will bring in Sh10 billion, including through bulk land sales.
  • Centum had already raised Sh4 billion from sale of some properties as of June.
  • Its real estate assets include a 29.1 percent stake in Two Rivers Mall, land and residential developments in Kiambu, Kilifi and Uganda.

Centum Investment Company #ticker:CTUM is selling land and property valued at Sh12 billion to reduce its exposure to the real estate market which has risen to represent 65 percent of its total assets in the year ended March.

The company says in its latest annual report that it will sell real estate assets worth Sh2 billion by March next year.

The biggest property disposals are planned over the next three years and will bring in Sh10 billion, including through bulk land sales.

Centum had already raised Sh4 billion from sale of some properties as of June.

Its real estate assets include a 29.1 percent stake in Two Rivers Mall, land and residential developments in Kiambu, Kilifi and Uganda.

The Nairobi Securities Exchange-listed firm has a target of spreading its investment across real estate (at 45 to 55 percent of the portfolio), private equity (30 to 40 percent) and marketable securities (10 to 20 percent).

Real estate has overshot the set limit as a result of growth in property values over the years besides last year’s sale of Coca-Cola bottlers which shrunk the private equity holdings.

“We are currently overweight on the real estate asset class largely on account of a growth in value over time and as a result of the exits we have realized in the private equity asset class,” Centum’s chief executive James Mworia writes in the report.

“Our strategic objective is to rebalance the overall portfolio by releasing liquidity from the real estate portfolio for re-investment in the private equity asset class, which we are currently underweight.”

Centum’s private equity holdings dropped to 17 percent, way below the minimum target of 30 percent following last year’s sale of Almasi

Beverages, Nairobi Bottlers and King Beverage for Sh19.5 billion.

“We are now well positioned to redeploy to private equity as we look to finalize the set up our Centum Private Equity Value Fund II,” Mr Mworia said.

“We have committed circa Sh6 billion to the fund that we expect to fully deploy within the Centum 4.0 strategy period.”

Sale of the beverage businesses has left Centum with Sidian Bank, Isuzu East Africa, NAS Servair and Longhorn Publishers as the key components of its private equity portfolio.

The company has raised its investment in government debt securities as a short-term capital-preservation strategy, adding that it is ready to start purchasing private firms as the Covid-19 pandemic subsides.

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