Centum Investment Company Plc launched its share buyback program on Monday, following the approval of shareholders to repurchase up to 66.5 million shares in an exercise that will run for 18 months until August 8 next year.
At the extraordinary general meeting held last week, shareholders overwhelmingly supported the initiative with 98.59 per cent of votes in favour of the move.
The company’s management has set aside Sh600.8 million to finance the buyback, to stabilize the share price and market valuation.
According to Centum’s CEO, James Mworia, the share buyback is expected to provide liquidity to shareholders who may not have been able to trade due to the current market conditions.
“It will reward long-term shareholders whose net asset value per share will improve as a result of the reduction in shares,” he said. The company has set the maximum share purchase price at Sh9.03 and the minimum at 50 cents.
In addition to the shareholder nod, Centum has also received approval from the Capital Markets Authority to expand the shares purchased in the program beyond the 25 per cent daily volume cap.
This exemption is crucial in enabling Centum to attain its share buyback target within the 18-month window, as the company’s daily traded volumes are typically below 100,000.
The share repurchase program is open to all shareholders, irrespective of size, but is subject to the maximum buyback size. The company’s floating shares are expected to reduce to 598.9 million at the end of the buyback exercise.
However, the board of Centum has reserved the right to terminate the buyback under certain conditions, including changes in economic and market conditions or if the program is no longer deemed to be in the best interest of the company.
On Monday, more than 500,000 Centum shares were traded, indicating a significant increase from the normal trading volumes.
Overall, Centum’s share buyback program is expected to have a positive impact on the company’s financial position, as well as improve shareholder value and confidence in the company’s future prospects.
