CENTUM INVESTMENT COMPANY LIMITED CHIEF EXECUTIVE OFFICER JAMES MWORIA SPEAKS DURING THE BELL RINGING TO COMMENCE TRADING FOR LONGHORN PUBLISHERS AT THE NSE IN NAIROBI ON MAY 31, 2016. FILE PHOTO | NMG Centum Investment Group #ticker#CTUM has put on hold plans to buy stakes in companies and is shifting money in government bonds to avoid losses in Covid-19 environment.
The listed investment firm has sold stakes in firms such as Almasi Beverages Limited, Nairobi Bottlers Limited and King Beverages Limited and delayed fresh acquisitions following disruption triggered by the pandemic, that has made it difficult for deal makers to value firms on the strength of future earnings.
Centum chief executive James Mworia said the firm has opted to put billions of shillings in government papers to navigate the pandemic without losing capital.
“A lot of the discussions we were having with companies and whatever projections they gave us were all blown up by Covid-19 so we cannot complete any deal now,” said Mr Mworia.
“When you buy a company, you are buying a future stream of cash flow. So when the cash flow has been disrupted you don’t want to still move in and get yourself into more problems.”
Mr Mworia said the environment that Centum faced between 2009 and 2019 is totally different from the current one and many firms that were seen as high growth firms are no longer attractive.
The firm has raised investment in high yield portfolio— 93 percent being government bonds— from Sh4 billion in March last year to Sh7.5 billion at the close of March 2021.
Centum Investment Group posted Sh1.37 billion net loss in the financial year ended March, down from a net profit of Sh4.63 billion in the previous year—marking the first full year loss in over 42 years.
However, Mr Mworia says the performance will not put the firm under pressure to rush into new investments, insisting Centum will only put money where it feels the risk-return trade off “makes sense”.
“It is very hard to defy the environment you are in. I cannot lie and add anything to it (the results). That is the way it is. Given how extreme the situation was, we did well,” said Mr Mworia.