Centum used internally generated cash after its plan to sell its stake in Sidian Bank to Nigeria’s Access Bank failed.
The company had planned to sell its entire 83.4% stake in Sidian Bank to Access Bank for Sh4.3 billion. Part of the proceeds would have been used to pay off the company’s debt. However, the deal fell through mid-January, forcing Centum Investments to look for alternative sources to repay the loan.
According to James Mworia, the CEO of Centum Investments, the company has managed to settle the debt using proceeds from land sales and loan repayments by its subsidiaries. Mr Mworia said that although the company is yet to find a new buyer for its stake in Sidian Bank, it remains optimistic about the future and is committed to reducing risk and building investor confidence.
Sidian Bank’s growth has faced significant challenges due to the Covid-19 pandemic and the introduction of interest rate controls in September 2016.
The bank is working hard to recover from these setbacks and is optimistic about the future. However, Centum Investments’ decision to sell its stake came as a blow to the bank’s recovery efforts.
The sale of Centum Investments’ stake in Sidian Bank to Access Bank was part of the company’s strategy to become debt-free at the parent company level.
The company had previously sourced funding for its various businesses but changed course to allow its subsidiaries to take loans they could repay without recourse to the parent firm. The aim was to reduce risk and build investor confidence by becoming debt-free at the parent company level.
Centum Investments’ share price had dropped to a record low of Sh8 on July 27 before embarking on a recovery.
The share closed Monday at Sh9.06, representing a 6.84% year-to-date return. The company has a market value of Sh6.03 billion, which is a fraction of the Sh41.3 billion book value it reported as of March 2022.
In conclusion, although Centum Investments’ plan to sell its stake in Sidian Bank fell through, the company remains optimistic and committed to reducing risk and building investor confidence.
It has successfully repaid a significant amount of debt using internally generated cash and is working hard towards becoming debt-free at the parent company level by the financial year ending March 2024.
