Regional infrastructure investment firm TransCentury is now implementing the last phase of its turnaround strategy, having reported positive results since it began the plan to return it to profitability.
The listed firm, says its Chief Executive Nga'ng'a Njiinu, has managed to cut its debts by over 40 per cent and establish deep relationships with key stakeholders and markets across Africa on infrastructure development.
According to the last publication on its financials for the six months to June 2021, net losses shrank by 47 per cent to Sh764.3 million.
This was largely due to a revenue jump of Sh536 million to Sh2.54 billion, which the firm attributed to the improved performance of its trading arm AEA Ltd and Tanzanian subsidiary Tanelec Tanzania, signalling future fortunes and positive growth.
"We are really pleased with where we are now. We can now sustain a fundable order book of more than one time our annual revenue. We have reduced our commercial debts by over 40 per cent and also increased the tenure of the debts, and we now have better execution of our projects," said Njiinu.
Recently, East African Cables, one of TransCentury's subsidiaries announced a 55 per cent growth in its revenue in its half-year trading results.
In a classical validation of the firm's return to profitability strategy announced earlier in the year, East African Cables' efforts to grow its distribution channels through accredited dealers throughout the region appear to be paying off.
Mr Njiinu explained the strategy, which also focused on revitalising the firm's operations at its Tanzanian subsidiary as registering positive recovery which had earlier registered a huge loss.
The strategy has served to raise the firm's local and export sales affording the firm a turnover of over Sh2.3 billion representing a 29 per cent growth up from Sh1.8 billion posted within the same period last year.
Mr Njiinu also noted that the engineering subsidiary was also registering positive results, signalling great business.
"We have made good progress as a consortium and are now at the last step of our turnaround strategy which is raising funding, which explains why we have issued a rights issue," he said.
The investment firm has set a target of raising Sh2.06 billion in its rights issue after settling for an offer price of Sh1.10 per unit, as the Capital Markets Authority (CMA) disclosed recently.
The offer price represents only a thin discount on the share's prevailing trading price of Sh1.11 at the Nairobi Securities Exchange (NSE) and is therefore likely to test investor faith in the company which holds a negative equity position of Sh9.07 billion.
The rights will be issued on the basis of five new ordinary shares for every existing share. The company currently has 375.2 million shares in issue at the NSE, and will therefore be introducing up to 1.88 billion new units into the market should the rights be fully taken up. "The proceeds of the rights issue will be applied to unlock additional working capital financing for the group and its subsidiary businesses and defray statutory obligations," said Njiinu.
Rights issues provide existing shareholders with an opportunity to purchase additional new shares from the company.
This type of issue gives existing shareholders the right to purchase additional shares at a prescribed price on a stated future date. The additional shares are usually sold by the company at a discount to the market price.
Legally, a rights issue must first be offered to existing shareholders before being offered to non-shareholders.
This is because existing shareholders have the "right of first refusal" otherwise known as "preemptive rights" on the new shares. By taking these preemptive rights up, existing shareholders can maintain their existing percentage holding in the company.
Companies are required to furnish the Capital Markets Authority (CMA) with their information memorandum when seeking approval. This includes historical financial accounts that have been reviewed by an audit firm, which ensures that the company is giving investors a true perspective of history.
A successful rights issuance means TransCentury will raise its target capital."We have capacity, strategy and experience within our market, and there are millions of opportunities in the region on the back of a growing population, a very resilient market in terms of gross domestic product (GDP) growth."
Infrastructure growth
The firm is now banking on increased infrastructure growth across the African region to soon return to profitability.
At the core of its strategy, the company is focusing more on sustainability and scalable investments, currently implementing the construction of 5,000 units of affordable housing in the Democratic Republic of Congo (DRC) as well as supplying and supporting similar projects in Kenya.
Earlier in the year, one of TransCentury's subsidiaries, AEA Ltd, entered into a $250 million (Sh30.5 billion) partnership to construct houses in DRC with Symbion Architect. Njiinu says such opportunities will bolster the company's fortunes as the region is a hub of opportunities.
"DRC is interesting for us, it's good to see the renewed energy to invest there, we continue to see opportunities there including in the population and under penetration of infrastructural development. We will continue to invest because there is a need and demand," he said.
TransC entury's core business has been on infrastructure specifically in the energy, transport, water, industrial, and agriculture sectors taking priority in investments in Kenya, Uganda, Tanzania, Rwanda, DRC, Burundi, Zambia, and South Sudan.
Looking into the future, Njiinu says TransCentury's focus on technology and data management will transform its business guided by technological innovation.
"We continue to look into growth through innovation and technology, like in the engineering side we are able to manage infrastructure like virtual weighbridges where we have a leading technology. We also continue impacting Africa on the agricultural end and Energy sector. With the new capital, we look into a great future," he concluded.
gnyele@standardmedia.co.ke
