Centum sees rate cap removal working in its favour

Centum won the 2019 Employer of the Year award

Kenyan banks celebrated last month’s removal of interest-rate caps, which they had blamed for crimping their credit business and limiting financing opportunities for small enterprises. But banks are not the only businesses hoping to reap from the rate caps removal. Centum Investment Company Ltd (CTUM) (ICDC) also sees a tailwind in the rate caps removal.

In an interview with the East African newspaper early this month, Centum CEO James Mworia said the removal of rate caps may result in bank loans becoming more expensive small and medium businesses. Consequently, some businesses may avoid going for bank loans to raise the capital and instead bring in strategic investors. Such a scenario would create more investment opportunities for Centum’s private equity arm, the executive suggested.

Centum set up a private equity unit called Centum Capital that identifies and invests in established mid-sized companies with bright growth prospects. Centum Capital is armed with Ksh8 billion in cash to invest in promising businesses across the East Africa region. Currently, Centum Capital is focused on seven priority industries, namely consumer goods, financial services, healthcare, energy, technology, agriculture and education.

Centum’s profit for the six months through September 2019 increased to Ksh6.8 billion from Ksh2.1 billion in a similar period last year. The profit was boosted by Centum’s private equity unit, which made excellent exits from two Coca-Cola businesses.