Centum Investment started a 66.5 million share repurchase program on Monday to stabilise the Company’s market value and stock price after getting the green light from shareholders.
The Company has allocated KES 600.8 million for this effort. On Friday, the Company’s shares ended trading at KES 8.74.
The Company opened the day’s trading at KES 8.84, a 0.69 per cent gain after the share buyback went live on Monday. Furthermore, the market closed at KES 8.90, recording a two per cent increase compared to the previous trading day. The shareholders approved a resolution that authorised the Company to buy up to 66,544,178 ordinary shares, 10 per cent of the total issued and paid-up share capital.
Additionally, the company directors were also authorised to re-allot shares acquired through the buyback due to another resolution that received the shareholders’ approval.
“We will now, beginning Monday, February 6, start buying the shares through on-market purchases at the Nairobi Securities Exchange as authorised by the regulator and our shareholders.” Said Centum Group CEO, James Mworia. He also mentioned that the share buyback is anticipated to offer liquidity to shareholders who may have faced difficulty in trading due to the prevailing low market conditions.
“It will reward long-term shareholders whose net asset value per share will improve as a result of the reduction in shares.” He said.
As per the regulations of the Capital Markets Authority, the maximum purchase price for each ordinary share has been set at KES 9.03 and the minimum at KES 0.50.
The buyback program will run for 18 months starting from the date of the resolution and will end on August 8, 2024. All shareholders are eligible to participate. However, the Company’s buyback limit is restricted to 10% of its ordinary shares. By remaining as shareholders, they stand to benefit from an increase in the company’s future earnings and capital gains.
The Centum board of directors retains the right to halt the buyback under certain circumstances, including if it is no longer in the best interest of the Company and shareholders, in response to changes in economic and market conditions, or in the case of a significant shift in the Company’s financial position.