Centum Investment Company successfully issued a KES 4.2bn 5-year note on 24th September 2012, which was made up of a floating rate note (FRN) of KES 2.9 bn with a 13.5% coupon and an equity linked note (ELN) of KES 1.3 bn with a 12.75% coupon plus an equity kicker of a maximum of 15% of the par value that was linked to growth in Net Asset Value (NAV) per share.
Centum is pleased to report that it will be redeeming the bonds in full upon their maturity on September 18th 2017, and that the offering resulted in significant value uplift for investors in the notes. Investors in the ELN will receive an additional KES 191 mn, representing a total equity upside of 15% of the par value in line with the terms of the issue. This translates to an annual internal rate of return of 14.9% for ELN investors.
Considering shareholders, at the point of the issue, Centum’s share price was at KES 11.75 as compared to a current share price of KES 41.75, which represents an annual internal rate of return of 31% and a cumulative return of 275% inclusive of dividends declared during the period.
Centum would like to thank the investors in its corporate issue, the Nairobi Securities Exchange and the Capital Markets Authority for making this milestone investment possible, and is proud of having established a track record of successfully raising capital from the debt markets, as well as retiring the debt in full on maturity.
In addition to the redemption of its corporate bond, Centum has retired its KES 3bn (USD 30 mn) facility from Rand Merchant Bank (RMB) which was set to mature in December 2017. The Group has subsequently obtained a KES 5bn (USD 50 mn) facility from RMB which matures over a 4 year period.
The net impact of these movements is that Centum has repaid in full the KES 7.2 bn of maturing debt that was falling due in 2017. The Company has therefore deleveraged, with long term debt decreasing from Kes 13.3 bn as at 31st March 2017 to KES 11 bn, comprising the KES 6.0 bn bond maturing in 2020 and the KES 5 bn (USD 50 mn) facility from RMB. James Mworia, the Group Chief Executive Officer, stated, “We are pleased to have delivered on our promise to our investors and are satisfied with the returns that we have generated for all our categories of investors. The support of our investors has made it possible for Centum to significantly transform. In 2012 when the Company issued the bond it had a total asset base of Kshs 15 Billion which has grown 4x to Kshs 61.5 Billion today. The Centum share price is still trading at a significant discount to the NAV per share and this presents further scope for generation of returns for our shareholders. Centum’s business outlook is very positive, with the business at a point in its maturity where we expect to generate significantly higher cash flows going forward and rely less on third party borrowings. We also have a robust pipeline of attractive proprietary investment opportunities that we have developed over the last three years and which we will invest in largely using internally generated funds. The ability of the business to repay more than KES 7.2 bn in the midst of a difficult year and still fund significant investments is testament to its strength.”
Finally, Centum is pleased to advise that that the Global Credit Rating Co (GCR) has awarded the Group a long-term rating of A and a short-term rating of A1, citing the Group’s substantial value enhancement as evidenced by the increase in NAV from KES 14 bn at FY12 to KES 44.8bn at FY 2017, as one of the many positive attributes informing the rating. It is particularly pleasing to note the positive rating outlook reported for Centum, further affirming the Group’s market leading positing in the East African region.
Dr Farai Shonhiwa
Group Strategy Director
Centum Investment Company
Tel: +254 709 902 000