Capital Markets
Centum buyback climbs to 4.8m shares after six months
Friday August 04 2023
James Mworia, the Centum Investment CEO. FILE PHOTO | JEFF ANGOTE | NMG
Centum Investment Company Plc says it had acquired 4.8 million shares in its buyback programme by the end of July, with the offer accounting for 45 percent of the company’s traded shares since it opened on February 6.
NSE-listed Centum made the update in an investor presentation for the full year ended March, where it also disclosed that in the first two months of the offer, it had already acquired units worth Sh37 million.
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Centum is targeting to buy back up to 66.54 million of its shares at a maximum price of Sh9.03 —and a minimum of Sh0.50— capping the spend on the exercise at Sh600.9 million.
The volume of stock that Centum intends to buy represents 10 percent of the total issued shares.
“4.8 million shares have been purchased to date, comprising 7.2 percent of the maximum possible 66.5 million shares that may be purchased over the 18-month period,” said Centum in the investor presentation last Friday.
“The total number of shares traded in the period was 10.5 million, thus the share buyback purchases made up 45 percent of total trading activity.”
Since the buyback opened on February 6, the Centum share has traded in a range of between Sh8 and Sh9.50, averaging at Sh8.81 per unit over the period, and 93,570 units per trading session.
Trading at levels close to the buyback price has had the effect of maximising the amount Centum is using to buy back the shares, while at the same time diluting the premium for those who opt to participate in the sale.
Bigger volumes of trades have, therefore, been recorded on the stock when the share price has dropped below the offer price, meaning that sellers in the market can see a premium when offloading to Centum.
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The company rolled out the buyback plan to address the undervaluation of its stock at the NSE.
Share buybacks have the effect of reducing the volume of outstanding stock, potentially boosting the market valuation besides increasing the stakes for shareholders.
