In line with its business strategy, Centum Investment Company Plc is weighing up the sale of of part of or all of its real estate subsidiary, Centum RE. The subsidiary was valued at Ksh16.6 Billion for the year ended March.
The funds raised would be reinvested in stocks, bonds and private equity, reducing the noticeable prominence of real estate in Centum’s portfolio. Centum RE’s assets include high-end apartments in Nairobi, exclusive residential estates in Kilifi and apartments and town-houses in Uganda.
“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,” Centum Chief Executive James Mworia confirmed in a new interview with Business Daily.
In a conversation with Mwango Capital on August 28, Mworia had broken down Centum’s business model, revealing the firm’s intention to grow Centum RE’s value with one eye on a lucrative exit.
“What our business model is is to create entities, create value and exit. So Centum Re our business, our CACP is not to sell houses. Our business is to make Centum Re as valuable as possible so that we can exit. Someone running those businesses is now selling the houses.
“One, the CEO running the operating business. So Centum Re, we invested seven and a half billion or 7 billion. We’ve gotten back about four and a half billion or 7 billion. We’ve gotten back about four and a half billion. So we have two and a half billion invested and we’re probably going to recoup our entire investment in the next one or two years. What is going to be left there is profit,” he disclosed.
Centum’s real estate assets represented 63.5% of its Sh47.5 billion worth of assets in the year ended March, against a maximum target of 55%.
“We have gone above the target not because of increased investment in real estate but because of the gains in the land and properties,”
The exit would enable Centum to reach its targets in marketable securities and private equity.
“The money raised (from the sale of Centum Re assets) will be reinvested in marketable securities (stocks and bonds) and private equity to reach our allocation target in these two segments,” Mworia noted.
Centum Investment notably retains a controlling 58% stake in Two Rivers Development Limited (TRDL). Two Rivers is a mixed-use development in Nairobi known for its lifestyle offerings including the Two Rivers mall, apartments and recreational spaces.