Kibaki era tycoons to lose grip of cash-strapped TransCentury

Associates of former President Mwai Kibaki are set to see a further dilution in their shareholding in TransCentury, with Kuramo Capital seeking to increase its stake in the investment firm to 74 per cent.

The two companies have this month sought regulatory approval from the Comesa Competition Commission for the transaction.

 “The proposed transaction entails Kuramo increasing its shareholding in the target to approximately 74 per cent,” said the regional competition watchdog in a public notice on the planned transaction.

“The parties have submitted that the proposed transaction will enable the target to use the capital raised to settle part of its debt obligations and to unlock additional working capital financing for itself and its subsidiaries. This is in line with its recovery and growth strategy.”

The firms said conclusion of the transaction would help TransCentury use the funds raised to settle debts as well as unlock additional capital financing for the company and its subsidiaries.

TransCentury has been struggling to stay afloat amid crippling debts taken years back as it expanded fast.

Kuramo, an institutional private equity investor registered in Mauritius, last year increased its shareholding in TransCentury by 24 per cent after conversion of a Sh2 billion shareholder loan into equity.

The investor took a 25 per cent stake in TransCentury in 2017 when it injected $20 million (Sh3.2 billion at current exchange rate).

TransCentury had at the time almost defaulted on making repayments for a Sh8 billion bond.

The company’s woes have since deepened and it was mid last year placed under administration over a Sh4.8 billion loan.

Business consultancy firm PwC had taken over the management of TransCentury and its subsidiary East African Cables due to its inability to service the loan from Equity Bank.

TransCentury, however, got some reprieve in October when the High Court rejected the bank’s quest to take the company into receivership after the investment firm appealed the move in court.

The court also extended orders preventing Equity Bank from seizing or interfering with TransCentury’s assets, until the case is heard and determined.

TransCentury last year tried to raise Sh2 billion through a rights issue but missed the target due to low shareholder subscription. The cash call raised Sh828.1 million, a 40.13 per cent subscription from the uptake of 752.8 million new shares.

Despite low capital raised in the transaction concluded in April 2023, the firm said the issue’s performance demonstrated strong investor confidence in the company’s future.

The challenges that it has been experiencing are taking the shine from the firm whose founding as an investment group and success in the initial years captured the dreams of many Kenyans who had formed investment groups.

TransCentury was started by a group of elite Central Kenya businessmen and with time was listed at the Nairobi Securities Exchange.