Centum Investment Limited has entered an agreement which if successful will see the firm relinquish its entire stake in the soft drinks business to Coca-Cola.
The signed agreement is expected to see the sale of Centum’s total combined stake in Almasi Beverages and Nairobi Bottlers Limited to Coca-Cola Beverages Africa (CCBA) at an initial transaction value of Ksh.19.5 billion over the course of the current financial year.
Centum Investment Managing Director James Mworia has attributed the exit to retracting economic growth which he expects to have a considerable impact on asset pinned investments in the long-term.
“Our focus is shifting from asset growth which has until now been anchored on robust economic growth. We are now shifting focus towards more cash generative businesses as opposed to relying on private equity (PE) exits,” Mr. Mworia told investors on Wednesday.
Proceeds acquired from the transaction are set to foot Centum’s outstanding debt obligations estimated currently at Ksh.7.5 billion (USD 75 million) with the balance being injected back into the business to finance other ventures.
Mworia expects the success of the transaction to further stimulate the growth of Centum’s share price which currently sits at an average Ksh.32, a substantive discount according to the firm, to reflect on the net present asset value per share estimated at Ksh.79.05 to better the return to shareholders.
“The idea is to payout debt at company level and avail cash flows to converge the share price through the boosting of dividend income and the initiation of a share-buy back program,” he added.
While Centum’s exit from the soda business may not necessarily signify other impending exits from its portfolio, the strategic shift of focus to cash dominant investments may see Centum relinquish some of its other stakes.
Centum has in the last five years initiated exits in its private equity portfolio from the Kenya Wine Agencies Limited (KWAL), insurer UAP and GenAfrica.
The investment firm has through its recent exit activities earned a total of Ksh.13 billion with exit gains represented by a share of Ksh.9.4 billion.
In spite of the numerous exits, Centum’s private equity portfolio remains substantive with a net present asset value of Ksh.21.2 billion including the recent acquisition and re-capitalization of Sidian Bank and stakes in Isuzu East Africa and NAS Servair.
Centum acquired a majority shareholding in Almasi beverages in 2013 through the consolidation of three bottlers at combined cost of Ksh.3.5 billion.
The NSE listed firm, which on Wednesday reported a net profit of Ksh.4.1 billion representing a 28 percent growth in earnings for the period ending in March 2019, is however forecast to make additional investments in the East African region through mid-market buyouts.
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