Centum;Carbacid deal raises questions

By Jackson Okoth

There is growing concern in the market over the speed with which Carbacid Investment Ltd has sold part of its stake to Centum Investments of Kenya.

Carbacid has in the past been embroiled in a takeover dispute with rival BOC Kenya Ltd, this matter being a subject of court proceedings.

It is therefore unclear whether this sale will interfere with ongoing court proceedings.

" Although we are not privy to the arbitration process, there is concern that there could be some shareholders locked in by this new deal and who are not in support," said a player in the capital markets.

The market is therefore still waiting for directions from Capital Markets Authority (CMA) on the implications of the Centum-Carbacid deal.

Efforts to obtain comments from James Mworia, the Centum Chief Executive Officer were fruitless.

Major contributor

Although a depressed Nairobi Stock Exchange(NSE) wiped out a significant portion of Centum’s fortunes last year, this does not appear to dampen its appetite for new deals.

Centum’s strategy revolves around raising capital cheaply, and investing in undervalued companies in sectors that are significant contributors to the region’s economic growth.

Carbacid is expected to provide Centum with a foothold in the tobacco and beer manufacturing, main consumers of its products.

As matters stand, the acquisition of Carbacid by BOC is yet to be approved by the CMA.

Trading in the shares of both companies was suspended on the NSE three years ago, leaving investors locked in with no option to pursue other goals.

Centum’s commercial interests have now expanded with purchase of more than 2.5 million ordinary shares of Carbacid.

Its associate companies include Coca-Cola bottling plants, Kenya Wine Agencies, Aon-Minet Insurance Brokers Ltd, UAP Provincial Insurance Company and Longhorn Kenya Ltd.

Its financial reports mention that prevailing market conditions offer a good opportunity for long-term investment in both private and listed equity and real estate.

Centum hopes to raise Sh2 billion in a five-year bond over the next three months.