Cytonn eases financing dilemma in new SBM loan facility

Investor firm Cytonn, has completed the acquisition of a Ksh.650 million credit line with the State Bank of Mauritius (SBM) to diversify its funding base away from investor and shareholder capital.

The loan facility, Cytonn’s first lender-held debt, will be used in financing the completion of its ongoing real estate investment — the Alma, a Ksh.3.5 billion residential development in Ruaka comprising of 477 apartment units.

Speaking at the joint signing ceremony between the investment firm and SBM, Cytonn Chief Executive Officer Edwin Dande said the facility will up shareholder funds into new projects while diversifying on the firm’s capital base to assure of investor confidence.

“Any developer needs the diversity of funding. For us, we look to have a mixture between mezzanine and institutional investments. We are at a point where the first phase of the Alma is 90 percent. The question would be why we should continue to put in more money from our shareholders,” he said.

The acquisition of the 3 year-tenure commercial debt is prompted by the firm’s self assessment of its capital base through the Global Credit Rating firm which in November 2018 warned of Cytonn’s over-reliance on mezzanine credit, described as the shareholder’s mix between equity and debt.

GCR instead recommended the evolution of the firm’s financing to include the pursuit of multiple financing instruments to include long-term credit acquisition.

Cytonn has since seen an improvement from its downgraded credit position to see its Finn partner Taaleri Africa Fund turn its cumulative Ksh.5 billion investment in Cytonn to a 20 percent stake.

The investment firm remains fixed on a potential listing venture exploring capital markets at both the local and international level having in the last couple of years made considerable gains to the diversification of its trading activities.

Cytonn has for instance in the recent past acquired a Real Estate Investment Trust (REIT) license from the Capital Markets Authority (CMA) and has launched its asset management arm through the acquisition of Seriani Asset Managers.

“2019 is shaping up to be a great year for Cytonn as we now have all of our licenses. Everything is set to go. We are also looking to get into the brokerage and investment banking,” Mr. Dande added.

Cytonn is now expected to move its shareholder and other investor capital into its other investment frontiers to include the recently launched Applewood real estate development in Karen.