Centum Investment plans to raise Sh4 billion from local investors to finance its ongoing housing projects in Kenya.
The investment firm said it will raise the funds through a bond issue by its development subsidiary Centum Real Estate.
“Proceeds from the bond will be allocated exclusively to the subsidiary’s ongoing affordable, middle-income and high-end housing projects in Kenya,” said the firm in a statement.
Centum Real Estate has approved a project pipeline of 4,426 residential units, with the first phase of 2,000 units under construction, while the rest are pre-selling.
The company recently handed over 96 high-end homes in its Uganda and Kenya developments. Centum Real Estate Managing Director Samuel Kariuki said subscribers to the bond will have an option of investing in an equity-linked component.
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“We are keen on addressing existing gaps in the linkage between Kenya’s real estate sector and the capital markets,” said Kariuki. He expressed confidence that the firm would repay the bond in time, adding that all the projects are currently debt-free and funded using internally-generated resources.
“Of the projects under construction, we have achieved an aggregate pre-sale level of 75 per cent and deposit collections of over Sh2.6 billion. Of these collections, over Sh700 million has been collected from April 2020 to date, demonstrating the resilience of the business despite the Covid-19 impact,” he added.
The bond will be secured by the projects with deposit collections flowing into a sinking fund.
“The sinking fund is an innovative solution to protect bondholders’ money and finance the bond redemption,” said Kariuki. Centum has a greenshoe option of taking up to Sh2 billion more if the bond is oversubscribed.