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This research report was prepared by the Research Department of Old Mutual Securities Limited. Old Mutual Securities Limited is a securities trading company licensed by the Capital Markets Authority (Kenya) for the purpose of facilitating trade on the Nairobi Securities Exchange.

Here are our views on the news making headlines today for Kenya:
Centum explores Sh8bn bond option in expansion plan. Even as Centum management said it is still testing the ground on the exact amount to be raised, sources who have been briefed by the advisors confirmed the firm is looking at raising up to KES 7.5 billion.

Our View: This is expected as the investment firm has a pipeline of investments in areas with high returns and less competition. Centum investment is the lead equity partner in the consortium that was awarded the tender to construct a 960Mw coal power plant in Lamu. The project is expected to cost approximately USD 2 Billion and will be structured as 75% debt and 25% equity which will then produce an ongoing revenue estimated at USD 200m per annum. The two rivers project is 60% let mainly from internationals coming into Kenya, and they expect by October the Mall will be open – in a full year the Mall alone is expected to generate USD 25m per annum of revenue. We believe Centum’s predominantly Kenya-focused investment portfolio is likely to see capital appreciation over the next 30 months. The company strategy for the next 5 years is to develop, scale and grow investment capabilities in 8 new sectors, Agriculture, Education & Health, Energy, Financial Services, FMCG and ICT and further grow our existing Real Estate investments which augurs well for the company’s performance going forward.

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