Centum Investment recorded a Sh1.1 billion
gain from the sale of its 26.4 per cent stake in Kenya Wine Agencies
Limited (Kwal) to South African brewer Distell in March.
The
transaction, alongside the sale of an eight per cent stake in
microcredit firm Platcorp in which it gained Sh432 million, was one of
the most profitable deals for the company in the year ended March.
“During
the year, we successfully exited our 26.4 stake in Kwal, which was a
legacy asset in our portfolio that was no longer aligned with our …
strategy, realising a gain of Sh1.1 billion,” the company says in its
latest annual report.
“We also partially exited our stake in Platcorp, realising a gain of Sh432 million.”
The
profit on the Kwal transaction included some Sh500 million the
investment firm had received from the alcohol manufacturer as payouts to
shareholders over the years.
Centum had already booked
major unrealised gains on the two investments, but received even higher
payouts from the buyers, expanding the profits.
Its
interest in Kwal was carried at Sh738 million, but the company sold it
to Distell for Sh1.1 billion, having acquired the stake in 1977 for
Sh12.2 million un-adjusted for inflation.
The Platcorp
equity was valued at Sh761.1 million, but was sold for Sh813.4 million.
Centum retained a 27.63 per cent ownership in the microcredit firm after
the deal.
Centum’s report shows it is sitting on
cumulative capital gains of Sh24.1 billion across its subsidiaries
including Almasi Beverages and Two Rivers Development Limited, setting
it up to realise significant profits in future divestitures.
“Notably,
realised gains from our exits from Kwal and Platcorp (partial exit)
were key drivers of our performance,” the company said.
The
gains helped mitigate a drop in income, which saw the company’s net
earnings decline 16 per cent to Sh8.3 billion in the year ended March.
The buyout of Centum raised Distell’s stake in Kwal to a controlling 52.43 per cent.
Distell
had spent Sh834 million to acquire its initial 26 per cent in Kwal in
2014, with the multinational paying extra in the Centum deal seen as a
reflection of the brewer’s growth.
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