Centum Investment has cancelled plans to acquire a 5.53 per cent stake in fashion retailer Deacons East African from private equity firm Aureos East Africa Managers.
Aureos issued a statement in July announcing it had signed an agreement to sell all of its 6.8 million shares in Deacons to the Nairobi Securities Exchange-listed firm.
Centum’s chief executive James Mworia, however, said in an interview the proposed transaction aborted after the company lost interest in the off-market deal that was negotiated privately.
“We did not make an investment in Deacons,” said Mr Mworia,” adding that the transaction was handled indirectly through Centum’s asset management subsidiary Nabo Capital.
“Nabo had reached an agreement to buy the shares at a price substantially lower than the market. This required an approval from the Capital Markets Authority (CMA) and by the time it came we had exited the deal.”
Mr Mworia said Nabo would have spent about Sh19 million to buy out Aureos. This represents a discount of about a third on Deacon’s current market value of Sh28.6 million on a similar volume of shares.
Nabo manages Centum’s listed equities and debt securities and offers similar services to other clients with a focus on African capital markets.
The fashion retailer’s CEO, Muchiri Wahome, declined to comment on the now-shelved transaction.
“We were not party to the transaction and have no information on it,” Mr Wahome said.
Deacons reported a wider net loss of Sh180.4 million in the half year ended June compared to a net loss of Sh52.6 million a year earlier.
The performance came on the back of flat sales at Sh1 billion and an increase in expenses that lowered its margins.
The company said it had moved to terminate its Angelo and Babyshop franchises as part of its restructuring plan.