Centum Investments gets Sh17b from GEM Global Yields
By John Otini, January 12, 2022Centum Investments has reached a Sh17 billion investment deal with Luxembourg based investor GEM Global Yields to spur business in the real estate sector.
The equity investment deal will allow the real estate firm to draw down funds by issuing shares of common stock to GEM subject to Centum’s public listing.
“Centum Real Estate (Centum RE), a subsidiary of Centum Investments is pleased to announce that it has reached an agreement with Gem Global Yields, to provide Centum real estate with a share subscription facility of up to Sh17 billion for a 36 month term,” Centum said in a statement yesterday.
Global Emerging Markets (GEM) is a Luxembourg based private alternative investment group managing Sh340 billion worth of assets with operations in Paris, New York, and the Bahamas.
Centum’s Chief executive officer James Mworia says the deal validates an independent market validation for the business model of Centum Real Estate which eyes opportunities whose demand has barely been met in Sub Saharan Africa.
Share subscription deal
Centum Real Estate said it will not draw down all the money at once, but it will be taking bits, and on a need basis, in exchange for shares in the real estate business.
“The share subscription facility will allow Centum Real Estate to draw down funds by issuing shares of common stock to GEM.
Centum Real Estate will control the timing and the size of each draw down and has no minimum draw down obligation,” the company said.
Centum said it is currently in the process of building over 1400 homes many of which have been completed. The firm said that it has another 3,000 homes in the pipeline.
“This commitment by GEM to invest in Centum Real Estate is in line with Centum’s mission to build extraordinary African enterprises and to provide a channel through which investors can access them,” said James Mworia.
The company has housing projects across East Africa and plans to invest across the continent.
With its flagship in the Two Rivers investment based in Nairobi, the firm also has a portfolio of other properties spread across Nairobi, Vipingo and Entebbe, Uganda.
Centum last year said it was looking to sell part of its shareholding in its property development subsidiary Centum Real Estate Limited that was valued at Sh16.6 billion in the year ended March.
The Sh17 billion deal could end up as a total acquisition of the real estate developer if the above valuation is credible.
Capital gains
The proposed transaction is expected to result in major capital gains for the Nairobi Securities Exchange-listed firm besides reducing the concentration of its assets in the real estate sector.
“We are open to selling part or all of our stake in Centum RE. We are doing this to rebalance our portfolio which is currently concentrated in real estate,” Mworia was quoted saying in one of the dailies last year.
In a review last month, South African based ratings agency Global Credit Ratings (GCR) affirmed Centum’s financial rating of A+ with a stable outlook, citing the firm’s strong capital base and strong liquidity.