Investment company TransCentury has spent Sh712 million on acquiring an additional 16 per cent stake in its subsidiary Civicon, signalling its confidence in the future prospects of the engineering and construction firm.
The investment firm first bought into Civicon, a mechanical and civil engineering contractor in 2011 when it acquired a controlling 62 per cent stake at an undisclosed price.
The new investment raises its interest in the subsidiary to 78 per cent, giving it a larger claim on its earnings and assets.
TransCentury says Civicon is poised to benefit from increased spending on infrastructure projects in the region including roads, energy and oil and gas.
“In 2015, the group acquired an additional 16 per cent interest in Civicon Africa Group Limited for Sh712 million in cash, increasing its ownership from 62 per cent to 78 per cent,” said TransCentury in its latest annual report.
The Nairobi Securities Exchage-listed firm is seeking a larger presence in contract engineering through Civicon, with the company also focusing on the power and transport sectors through the same subsidiary and others.
TransCentury says Civicon has undertaken works from several government and corporate clients including Chevron, Kenya Breweries, Shell and the government of Southern Sudan.
Its projects include exploration, logistics and building of bridges, fuel depots and transmission lines. Engineering has emerged as the most important business division, overtaking power which was previously the largest in terms of revenue.
The engineering unit raked in Sh7 billion last year, accounting for about 60 per cent of the Sh11.7 billion total revenue in the period.
It was followed by power whose sales stood at Sh4.7 billion to account for 40 per cent of the turnover.
In 2014, power had the most revenue at Sh6.6 billion or 65 per cent of the total sales while engineering was second with a turnover of Sh3.6 billion which accounted for 35 per cent of the combined sales.
TransCentury has a presence in the power business mainly through East African Cables which produces electricity power lines and transmission equipment.
The investment firm scaled down its transport division in 2014 when it sold its 34 per cent stake in the Kenya-Uganda railway concessionaire Rift Valley Railways citing a downgraded outlook for returns.
TransCentury’s focus on the capital-intensive sectors has seen it borrow heavily, a move that has weighed down its earnings in the form of finance costs and foreign exchange losses.
The firm, which has taken loans from financiers, has moved to consolidate over Sh15 billion worth of debt under Cairo-based Africa Export-Import Bank (Afreximbank) which will assume the liabilities from existing creditors.
