Centum CEO James Mworia. FILE PHOTO | NMG
Centum Investment Group said Friday it is in advanced talks to acquire three undisclosed Kenyan companies months after making a string of exits.
Centum Capital Partners, a wholly-owned and independently managed subsidiary of the Centum Group, said it plans to invest up to Sh5 billion over the next five years in diverse sectors of the economy.
Centum has in the past acquired significant stakes in firms operating in diverse sectors including financial services, fast-moving consumer goods (FMCG), manufacturing, energy, education, and technology.
“We are building a promising pipeline of deals, we’re in talks with a number of investee targets that we hope to conclude in the coming months,” said Fred Murimi, Managing Partner of Centum Capital Partners in a statement.
“Three of the targeted firms are based in Kenya while two are in neighbouring countries,” Mr Murimi added without divulging the identity of the target firms.
Several distressed Kenyan firms in the Covid-19 hit travel, entertainment, energy, and financial sectors could be snapped up by private equity (PE) funds eyeing quick bargains, Japanese law firm, Anderson Mori & Tomotsune said earlier.
Coronavirus-fuelled lockdowns and a major shift toward working from home have hit many Kenyan firms hard leading to massive layoffs and shutdowns.
Distressed companies are often seen as attractive acquisition targets. Their stock and debt often trade at prices reflecting the difficulties they face and may be under pressure to sell assets, businesses, or securities quickly to raise capital or pay down debt.
“The Covid-19 pandemic has made valuations attractive for private equity funds as investors seek capital to navigate the new normal and take advantage of emerging business opportunities,” said Centum.
The firm’s current private equity portfolio worth an estimated Sh9 billion is spread across East Africa and includes stakes in Longhorn Publishers, Isuzu East Africa, Nas Servair, and Sidian Bank.
Centum’s recent notable exits include Almasi Beverages, UAP Insurance, and Kenya Wine Agencies Limited.
“We take a long-term view to investing in businesses,” said Mr Murimi.
Centum Investment Group posted the first full-year loss in over 42 years, in the financial year ended March 2021 weighed down by a drop in sales and investment income that failed to stop it from paying dividends.
The loss was a drop from a Sh4.63 billion net profit posted in the preceding financial year.
The loss came on the back of its trading business, Two Rivers Development Group, and investment business all posting operating losses.
Centum recently shut down its shared services division as part of its cost-cutting plan, which will see staff members sent home.