Centum Investment Company managing director James Mworia/ Twitter
NAIROBI, Kenya Jan 20- The financial consultancy firm that helped Centum Real Estate ink a share subscription facility deal of upto Sh17 billion with GEM Global yield, now wants a share of the money.
Raisin Limited has written to Centum Development Kenya Limited stating it had entered an agreement with the real estate firm on June 17, 2021.
According to the consultancy firm, the terms dictated that Raisin would source for investors and would receive a commission of two percent of all funds raised.
Raisin’s lawyer, DBM Mosota, wrote to Centum on January 17 noting that given the nature of the services sourced, it is a fundamental term of the agreement that no party attempts to circumvent the other in a bid to gain the benefits or considerations under the agreement.
“In blatant breach of clause seven of the agreement, your company through its sole shareholder and directors circumvented the terms of the agreement and commenced negotiations with GEM leading to the execution of an investment agreement of Sh17 billion between Global Yield LLC under GEM and Centum Real Estate Limited,” read part of the letter.
In the letter, Raisin says it sourced for investors and introduced Global Emerging Markets (GEM) to Centum in fulfillment of their obligations under the agreement.
Centum Plc managing director James Mworia dismissed the claims terming them as an extortion attempt.
“He is a stranger in this deal. We are not aware of his claims. If he is genuine, let him show you our correspondence with him,” he said.
The letter added that Centum and its agents sought to bypass terms of agreement by directly engaging with GEM Global to exclude Raisin in the deal, in a bid to deny them the commission.
It added Raisin is entitled to Sh340 million which is two percent of the capital investment.
“We are under instructions to demand from you which we hereby do, that within 15 days of receipt of this letter you pay our client the commission of Sh340 million for the successful introduction of GEM,” reads the demand letter in part.
Centum had on January 11 revealed the shares will be issued via a new agreement with Luxembourg-based private investment group, GEM Global Yield LLC SCS.
The investor is expected to provide Centum Real Estate with a share subscription facility of up to Sh17 billion for a 36-month term following a public listing of the shares.
“The share subscription facility will allow Centum Real Estate to draw down funds by issuing shares of common stock to GEM. Centum Real Estate will control the timing and the maximum size of such drawdowns and has no minimum drawdown obligation,” the firm said in a statement.
GEM is expected to assure the partial uptake of the shares subscription in what is seen as a move by Centum to firm up its new capital raising strategy.
“The commitment by GEM is a major vote of confidence in Centum Real Estate and its business model and this investment will go a great way in significantly scaling up the business of Centum Real Estate,” Mworia said.
The real estate firm is currently developing over 1,400 homes many of which are already completed.
Another 3000 housing units are in the pipeline to be developed in the near term. Additionally, Centum Real Estate holds bulk development rights across its land banks for its future housing development and sale to other developers.
GEM meanwhile has an asset base of $3.4 billion (Sh384.9 billion) and has operations in Paris, New York and the Bahamas from which it manages a variety of investment vehicles.