Centum defies bond drought, raises Sh3bn

Centum’s real estate-backed bond has defied the 43-month corporate bond market drought, raising Sh3 billion, a 75 per cent subscription rate.

Centum Real Estate managing director Samuel Kariuki described the outcome as a major success, saying they were targeting a minimum of Sh2 billion with a green-shoe option of taking up to Sh6 billion in case their Sh4 billion issue was oversubscribed supported by strong a balance sheet that currently stands at Sh35 billion.

“The bond will be listed for trading on the Nairobi Securities Exchange once regulatory approval is secured and it is structured as a medium-term note where the company may opt to re-open the offer before the December 16, 2023 maturity to raise subsequent tranches in line with construction funding needs, which are spread out over a period of time.

He said vanilla bondholders — investors who inject funds for a return — would earn a 12.5 per cent return while equity-linked note-holders (investors injecting funds with an option of owning a unit) earning between 12 per cent and 14 per cent.

 Two projects

Centum Real Estate is the holding company for the group’s Vipingo Development Limited at the Coast, Pearl Marina Estates Limited in Uganda, Uhuru Heights Limited in Nairobi and Centum Development Kenya Limited.

The firm recently completed and handed over two projects to homeowners in Vipingo and Entebbe.

Lead arrangers of the bond, Private Wealth Capital welcomed the outcome, saying Kenyans were regaining confidence with the bond market, which has suffered a 43-month drought after some issuers collapsed sinking investor funds.

“Investors are now regaining confidence in the corporate bond market after the negative experience in 2019,” said Private Wealth Capital chief executive Kabaki Wamwea, adding that they expected heightened interest among investors when the bond is introduced at the Nairobi Securities Exchange.

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