Centum Investment Company Plc has successfully acquired 4.8 million shares as part of its ongoing buyback programme, accounting for 45% of the company’s traded shares since the programme’s initiation on February 6. This update was disclosed in an investor presentation for the fiscal year ending in March. The company’s efforts to repurchase its own shares aim to address the undervaluation of its stock on the Nairobi Securities Exchange (NSE), a strategy that has garnered significant traction.
Buyback Progress and Figures
Centum Investment Company’s buyback initiative, targeting up to 66.54 million of its shares, has seen a positive response. By the end of July, the company had acquired 4.8 million shares, representing 7.2% of the potential maximum shares to be repurchased over the 18-month period of the programme. Notably, the number of shares bought back amounted to 45% of the total trading activity during this period.
In the first two months of the programme, Centum had already acquired shares worth Sh37 million. The company’s stock has been trading in a range of Sh8 to Sh9.50, averaging at Sh8.81 per unit, with approximately 93,570 units changing hands per trading session.
Objectives and Effects of Buyback
Centum’s buyback programme is aimed at addressing the perceived undervaluation of its stock on the NSE. Through the repurchase of shares, the company aims to reduce the volume of outstanding stock, potentially increasing the market valuation and enhancing the stakes for existing shareholders. The strategy also seeks to create value for shareholders by utilizing excess capital to acquire undervalued shares.
Market Response and Dynamics
The buyback programme has been met with market dynamics that influence trading patterns. Trading at levels near the buyback price has resulted in more shares being acquired by Centum, maximizing the amount spent on repurchases. Additionally, this has slightly diluted the premium for participants in the sale. When the share price falls below the offer price, increased trading activity has been observed, benefiting sellers offloading shares to Centum.
Centum Investment Company’s ongoing buyback programme has demonstrated significant progress, with 4.8 million shares acquired, representing a substantial portion of trading activity. The initiative underscores the company’s commitment to addressing the undervaluation of its stock and enhancing shareholder value. As the programme continues, its effects on market dynamics and investor sentiment will be closely monitored, providing insights into the potential success of Centum’s strategic approach.