Centum gets Sh5b as debt matures

South Africa’s Rand Merchant Bank (RMB) has handed investment firm Centum a Sh5 billion facility that will mature in 2021.

This comes after a South African ratings agency Global Credit Rating (GCR) approved Centum’s creditworthiness, giving the firm a long-term rating of A and a short-term rating of A1.

GCR said Centum’s net asset value has been on a growth trajectory from Sh14 billion in 2012 to Sh44.8 billion in 2017, a positive attribute informing the rating.

The loan comes as Centum retires two facilities including a Sh3 billion ($30 million) loan from RMB which was set to mature in December 2017. It also settled a Sh4.2 billion corporate mixed note which was set to mature this month.

Some of the lenders who bought into the Centum bond in 2012 will take home Sh191 million when the firm pays the debt on Wednesday.

Centum issued an equity-linked note of Sh1.3 billion with a 12.75 per cent coupon plus an equity kicker of a maximum of 15 per cent of the par value that was linked to growth in net asset value per share.

“Considering shareholders, at the point of the issue, Centum’s share price was at Sh11.75 as compared to a current share price of Sh41.75, which represents an annual internal rate of return of 31 per cent and a cumulative return of 275 per cent inclusive of dividends declared during the period,” Centum Chief Executive James Mworia said.

The bond also comprised a floating rate note of Sh2.9 billion with a 13.5 per cent coupon.

The firm, however, said it is keen to finance growth organically, relying less on debts.

“Centum’s business outlook is very positive, with the business at a point in its maturity where we expect to generate significantly higher cash flows going forward and rely less on third party borrowings,” said Mr Mworia.

He said the company also has a robust pipeline of attractive proprietary investment opportunities that have developed over the last three years and which it says it will largely invest in using internally generated funds.