Centum wants to sell Two Rivers stake but admits market is not conducive
Investment firm Centum wants to sell over 20 per cent stake in Two Rivers Development Ltd and become a small shareholder as it tries to cut debt and shore up revenues.
Chief Executive James Mworia said they are looking at getting a strategic buyer who will dilute their stake to around 30 per cent to bring in money to retire the portfolio’s debt.
At the moment, Centum holds 58 per cent in Two Rivers Development Ltd while AVIC International holds 39 per cent, and ICDC owns 3 per cent but the business was loss making to the tune of Kes 1.9 billion in the year ended March 2021.
Centum reported Kes 606 million loss in the year ended March being an improvement from Kes 3.4 billion loss at the same stage in c2020.
Read also: Sh1.9 billion Two Rivers mall loss pushes Centum in the red
“We want to bring in some equity investment and that of course will dilute us, we might be 30 to 35 per cent, we do not know. Someone said to me once I would rather be a tail on a lion than the head of a dog,” Mr Mworia said on NTV’s Business Redefined show.
Centum has been making the bulk of their money by offloading their portfolio businesses each year. This is the first year the company has not sold a portfolio in a while.
In 2019, Centum recorded a profit of Kes 7.38 billion attributed to the sale of 53.9 per cent stake in Almasi Beverages Limited and 27.6 per cent stake in Nairobi Bottlers Limited for Kes 19 billion.
Centum says the deal injected Kes 12.5 billion to the company’s income, an aspect that has not been repeated this year.
The company strategy has been based on buying companies on the cheap and improving their balance sheet to sell at a high but now says it has stopped aggressively acquiring companies due to the tough operating environment.
Mr Mworia says the market is swamped with offers but some of the companies are suffering from income shortfalls and too much debt which makes them unattractive.
Buyers are also not too sure when market conditions will improve to allow them to turn around struggling firms or even find a market for them once they do.
“We have looked at 200 deals but what we are asking is not how much can we make but how much can we lose. You do not want to buy a business and the first thing you do you start provisioning for impairment,” he said.
“We were some of the most aggressive companies some years ago but now we are conservative,” he said.
