Centum’s #ticker:CTUM real estate arm is seeking to raise Sh17 billion in equity investment from Luxembourg-based private equity firm GEM Global Yield, with the fund effectively underwriting the planned listing of the property developer.
Centum Real Estate said on Tuesday that it will control the timing and the size of drawdowns from the fund which is expected to take a minority stake in the transaction.
The deal also has no minimum drawdown obligation for Centum Re. The agreement with GEM carries a 36-month window after listing for Centum Re to draw down the funds.
The wide discretion given to the firm to determine the timing and size of drawdown offers it some protection from having to take up the funds under unfavourable market conditions, for instance, if the share price ends up going higher than the value of the GEM offering.
Samuel Kariuki, the chief executive of Centum RE, said that the mooted listing will allow the company to access global capital, besides providing price discovery for investors like Centum.
“Listing of Centum RE is a precondition to accessing the funds. So GEM Global will basically underwrite the listing, but the intention is not to have GEM Global take control of Centum RE,” said Mr Kariuki.
“We are yet to pick the listing venue. We are a pan African developer with assets in Kenya and Uganda so we will decide the appropriate listing venue at a later time.”
Nairobi Securities Exchange (NSE) #ticker:NSE listed Centum has been planning the sale of shares in the real estate arm for some time, with the listing of the subsidiary expected to make it easier for the investment firm to sell part of its interest to other investors.
Centum has been looking to book major capital gains and reduce the concentration of its assets in the real estate sector, with an intention of redirecting its cash into marketable securities (stocks and bonds) and private equity.
Centum held 63.5 percent of its Sh47.5 billion worth of assets in the year ended March 2021 in real estate, overshooting its target maximum of 55 percent.
The company recently consolidated most of its real estate ventures into Centum RE, comprising land and properties being developed in Nairobi County, Kilifi County and Uganda. cmwaniki@ke.nationmedia.com