A US financial platform has raised concern over a listed condom maker’s Sh502 million Kenyan investment saying shareholders risked losing cash.
OTC Markets Group, an American trade market, which provides price and liquidity information for almost 10,000 over-the-counter (OTC) securities, posted the comments on its website saying Restance shareholders’ funds were at stake as the condom-making business was “over-saturated”.
Quoting an analytical report by local website, ancereport.com, OTC Markets said Restance should clear the air over its Kenyan investment.
Restance has, however, shrugged off the claims saying its investment in Kenya’s first latex factory was informed by the expected returns on investment.
It has reported receiving an initial order to manufacture condoms worth Sh50 million and anticipates to generate sales amounting to Sh2 billion annually.
Chief executive Randell Torno termed the information as an exaggeration that could be misleading.
“We appreciate OTC Markets efforts to protect investors from unscrupulous initiatives to bilk (defraud) investors and we are happy to work with OTC Markets to address the concern,” said Mr Torno.
Restance defended its investment saying it was not only a profit-making venture, but a socially responsible endeavour to rid Kenya and Africa of the dreaded Aids epidemic.
“Restance is concentrating its business development efforts at this time in East Africa and has indeed entered into a contract to produce condoms under the Playboy logo as part of a socially responsible campaign to contribute to the end of the Aids epidemic,” said Mr Torno.
Ancereport.com portrayed condom business as insensitive profiteering, where one spent about Sh2 (2US cents) to Sh3 (3US cents) in production only to dispose the same at about Sh112 per unit, with the most expensive going for Sh400.
“While operating as a small cap company, ANCE (Restance) is positioning itself to deliver sales that could take it from trading as a penny stock to a serious competitor with the biggest names in the health products market,” said Ancereport.com.
Mr Torno said they had demanded OTC Markets pulls down the information and promised to later issue a statement on the Kenyan investment.
According to a recent study on Kenya, demand for the protection stands at 360 million against supply of 190 million yearly imported into the country.