M a r k e t N e w s

Centum to raise Sh39bn for Lamu coal power plant

Posted on : Thursday, 15th January 2015

 Investment firm Centum is set to raise at least Sh39 billion as its share for the $1.8 billion (Sh163 billion) Lamu Coal power plant which it is building in a joint consortium.Centum and Gulf Energy, another Kenyan firm, form part of a consortium that won the tender to build the 960 megawatt (MW) power plant.

Chinese multinationals Sichuan Electric Power Design and Consulting Company Limited, Sichuan Power Construction Company and China Huadian Corporation Power Operation Company are also in the consortium.The partners have planned to raise $450 million (Sh40.9 billion) in equity and the remaining $1.35 billion (Sh122.8 billion) through debt. Centum says it will raise its share of the amount through the local capital market.

“We are applying to the Capital Markets Authority to approve the fundraising. We are investing Sh39 billion in the project,” Chris Kirubi, a director of Centum said on Tuesday in an interview. He however declined to say the market instrument that Centum will use to raise the cash, only hinting that it will be an interest-bearing security. The NSE-listed could either issue a corporate bond or an asset-backed security.
 
“The details are yet to be finalised, but we have a bias for a dollar-denominated instrument that will offer returns higher than those currently available in the market,” Mr Kirubi said.He said that Centum hopes to raise the entire amount from local institutional investors and wealthy individuals, including pension funds and other asset managers.“Foreign funds are waiting in the wings, but we are giving priority to local investors,” said Mr Kirubi.
 
Centum itself has Sh35 billion of assets under management and also invests third party funds amounting to Sh140 billion.
The fundraising comes after the consortium’s win of the tender was upheld by the Public Private Partnership (PPP) Committee after a complaint by the HCIG-Liketh Consortium which had lost the bid.Centum is looking at the Lamu power plant to earn significant and stable long-term returns.
 
The consortium is expected to sign a power purchase agreement with Kenya Power which is the sole distributor of electricity to households and commercial enterprises. Investors have been attracted to the power generation business following favourable government policy and increased economic growth that is raising demand for electricity
 

Source : http://www.businessdailyafrica.com/Corporate-News/Centum-to-raise-Sh39bn-for-Lamu-coal-power-plant/-/539550/2588370/-/2i0acp/-/index.html
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