How Centum plans to spend Sh19.5bn from Coke stake sale

Centum Investment Company #ticker:ICDC plans to spend Sh19.5 billion proceeds from the sale of its stakes in Almasi Beverages Limited and Nairobi Bottlers Limited to pay off debt and make new investments.

Chief executive James Mworia on Wednesday said the firm is set to offload its entire 53.9 per cent stake in Almasi Beverages and 27.6 per cent in Nairobi Bottlers to Coca-Cola Sabco East Africa (CCBA) as it cuts appetite for capital gains in favour of investing more in cash-generating businesses.

“These are assets that were giving us capital growth rather than dividends. We want to focus more on cash generation and paying more dividends as opposed to capital appreciation,” said Mr Mworia in an interview following the release of the company’s annual results.

“We can’t hold stakes for sentimental purposes. Our ability to drive up value in that business has reached an end. We are investors, not bottlers, so we may not make operational improvement as CCBA would.”

Centum has raised Sh36.3 billon through partial or full exits in its investment portfolios in the past five years, leading to Sh24.3 billion capital gains.

Completion of the latest deal, subject to regulatory approvals, will hand CCBA a 100 per cent stake in Nairobi Bottlers from the current 72.4 per cent and 53.9 per cent shareholding in Almasi Beverages, deepening its grip in the beverages market. CCBA holds several bottling operations spread across 12 African countries.

The NSE-listed investment company has been earning about Sh400 million dividend annually from these two stakes, whose historical cost was Sh3.4 billion. Mr Mworia said Centum will use the sale proceeds to repay a Sh7.5 billion dollar-denominated bank loan, generating an annual finance costs saving of Sh700 million.

The balance of the proceeds will then be invested in private equity and marketable securities portfolios, which Mr Mworia is upbeat will generate more cash.