Johannesburg based GCR Ratings has affirmed Centum Investment’s long and short term Issuer ratings of A+ with a stable outlook citing a balance in the company’s concentrated investment portfolio against its strong financial profile.
The agency also noted that Centum’s investment portfolio is sizeable in regional terms, with a valuation of more than Ksh 45 Billion which includes ahighly concentrated marketable securities portfolio.
“The majority of investments are located and operate within Kenya, while there are very large single name (and therefore industry) concentrations within the portfolio. As of September 2021, Centum RE (rated BBB+(KE) by GCR) accounted for around half of the total investment portfolio, with the exposure to real estate comprising around 65%.” GCR noted in the report.
Additionally, GCR says that Centum’s real estate investees are property developers, which the agency considers to be a very risky segment of the real estate market, given its susceptibility to economic cycles and changes in consumer confidence.
“Centum has indicated its intention to rebalance its portfolio, with real estate investments expected to moderate to 45-55% over the next two years, as it looks to unlock capital from selling an interest in its key asset for redeployment into other growth avenues. GCR would expect the new investments to contribute to a more diverse investment portfolio, which would be important in offsetting the potential loss of scale post the Centum RE unbundling.” add the report.
Centum has a proven track record of developing new projects and selling mature investments and GCR considers this as a rating strength. Despite the disruptions caused by COVID-19, GCR says that half of Centum’s investee companies continued to record profits and all remained self-funded with no capital calls to Centum.
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