• Wed. Nov 29th, 2023

Centum to Reduce Real Estate Investments from 64% to 45% after US$12.14 Million Loss

UGANDA, Kampala | Real Muloodi News | In the financial year that ended in March 31, 2021, Centum Investments Ltd. registered a net loss of $12.14 million. This has prompted it to freeze new real estate investments.

According to the group’s audited financial statements, most of the losses came from the Two Rivers Development Company (TRDC) Ltd. Centum holds a 58 per cent stake in TRDC. TRDC registered losses of $16.96 million in the financial year ending March 31, 2021.

James Mworia, the Centum Chief Executive Officer, revealed that the move comes as Centum opts to push more money into market securities because they can generate recurring income.

Scaling up

“The purpose of diversification was to find new sources of value. That is the idea. Can I get an opportunity that can create significant value for Centum? All these lenders are willing to lend us for new opportunities, but the issue now is finding those opportunities. It is not as easy because if you get a wrong opportunity you lose your money and our idea is not to lose money,” Mr Mworia said.

According to its 2021 report, Centum increased investments in government securities to $66.96 million from $36.6 million in 2019.

“The key thing is finding entities we can scale up, an entity that can make four to five times return, which is not easy. It is difficult to find that kind of entity where you can work on, scale it up and then be able to exit at a profit,” said Mr Mworia.

Centum has currently shifted to using internal funds to finance its investments instead of loans, whose interest rates have previously threatened operations.

In 2019, Centum had a debt to the tune of $142.85 million, but now it has reduced to $35.71 million.

“Having accomplished the foregoing objectives of debt repayment and enhancement of recurrent cash income, I believe we are well-positioned to generate sufficient free cash flows into the future that will help improve distributions to the shareholders,” Mr Mworia said.

Prime Sector Focus

Centum employed a five-year plan (2019-2023) named ‘Centum’s 4.0 Strategy’. In the plan, Centum looks to reduce investments in real estate from 64 per cent of total assets to between 45 per cent and 55 per cent.

It also seeks to scale down investments in marketable securities from 16 per cent of the total assets to 10 per cent.

However, as of March 31 this year, investments in marketable securities, private equity, and real estate stand at 16 per cent, 20.5 per cent and 63.5 per cent, respectively.

“We are currently clearing the debt and scaling up the existing entities. If we get some [investor] exits, we could use part of the money to do a share buyback,” said Mr Mworia.

Centum currently focuses on building an investment portfolio across six sectors in the East African market, including Financial Services, Fast Moving Consumer Goods (FMCG), Energy, Agribusiness, Education and Healthcare, with a bias towards Buyout and Growth transactions.

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