Corporate News
TransCentury chief executive Gachao Kiuna during a past interview. FILE
By Victor Juma
In Summary
- The projects are set to be developed over the next three years and will be modelled along the lines of Transcentury’s 35-megawatts geothermal power plant in Menengai.
TransCentury
is set to form an investment vehicle for joint-venture infrastructure
projects in power, engineering, and transport sectors, from which it is
targeting to earn management fees.
The company has plans to raise $500 million (Sh43.5 billion)
from investors and through its own cash contribution to the projects.
“We will add value by originating, building and
operating the infrastructure projects,” said TransCentury’s CEO Gachao
Kiuna at a company briefing.
Besides taking a share of profits from the
projects, TransCentury will also benefit from management fees and
contracts issued to its subsidiaries like Civicon, an engineering firm.
Minority stake
The projects are set to be developed over the next three years and will be modelled along the lines of Transcentury’s 35-megawatts geothermal power plant in Menengai which is under construction. Mr Kiuna said the company is building the Menengai plant in which it has a 50 per cent stake, with the remaining equity held by other investors.
The projects are set to be developed over the next three years and will be modelled along the lines of Transcentury’s 35-megawatts geothermal power plant in Menengai which is under construction. Mr Kiuna said the company is building the Menengai plant in which it has a 50 per cent stake, with the remaining equity held by other investors.
TransCentury is, however, expected to take a
minority stake in most of the Sh43.5 billion projects given the huge
cash outlay required for majority ownership.
The Menengai power plant is projected to contribute
$30 million (Sh2.6 billion) in annual revenue following its completion
next year.
The company’s financial performance this year is,
however, expected to take a hit from its recent divestiture from Rift
Valley Railways (RVR) at a loss. TransCentury is trading on a profit
warning for 2014 when the full write-down of the fair value loss on RVR
of Sh1 billion will be done.
“From our estimates, we see a strong likelihood
that TCL will post a loss for the full year,” said Standard Investment
Bank in a research note.
The company made a net profit of Sh626.4 million
last year and expects a material decline from that level, citing the
loss it incurred in the sale of its 34 per cent stake in RVR for Sh3.8
billion in March.
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