Centum seeks pension funds to finance Lamu coal project

Investment firm Centum through its subsidiary, Nabo Capital, is seeking pension funds in Kenya to construct a power plant in Lamu County.

Centum’s 1,050MW Amu power project is the single largest private sector energy investment in the country. Centum is seeking $500 million (about Sh47 billion) with half the amount expected to come from local pensioners.

The potential investors are being offered 12 per cent rate of return for the project over a 29-year period.

“The country paid Sh17 billion to foreign companies last year most of which went to pension funds abroad. We want the local pensioners to benefit from the investment in the country’s infrastructure development,” said Mr Job Muriuki, an investment officer at Nado Capital.

He was speaking at the Intercontinental hotel in Nairobi yesterday during the release of a study on performance of pension funds in Kenya that was conducted by Alexander Forbes.

Potential investors will jointly invest with Centum by getting into a partnership agreement by July 31.

Centum is the lead sponsor of the power project while Equity Bank is the placement institution.

Alexander Forbes chairman Sundeep Raichura said pension funds should venture into infrastructure development to diversify investment options and maintain the growth rates realised in recent years. He said many pension funds in Kenya have invested in fixed income securities and equities with some limited exposure in property and offshore investments.

“The close to Sh800 billion sitting in Kenya’s retirement funds can be used to build Kenya as well as deliver a return to the members of pension funds.

“Projects under Vision 2030 offer the pension funds an opportunity to diversify their investment portfolio,” he said.

According to the law governing pension funds, upto 10 per cent is allowed for investment in other categories, which Mr Raichura said can be used to invest in infrastructure projects.