A financial consultancy has accused Centum Investment Company’s real estate of bypassing agreement terms to raise funds at a commission for its subsidiary Centum Real Estate.
In a letter Raisin Limited is claiming a finder’s fee capped at 2 per cent of funds raised after the Centum Real Estate Limited signed an agreement with Global Emerging Markets (GEM) for a 36-month, Sh17 billion share subscription facility following a public listing.
Raisin’s lawyer DBM Mosota wrote to Centum on January 17 saying given the nature of the services sourced it is a fundamental term of the agreement that no party would attempt to circumvent the other in a bid to gain the benefits or considerations under the agreement.
For any purposes including engaging in any discussions, negotiations or agreement either through itself, affiliates, subsidiaries or any person introduced to it by other parties,” read part of the letter Raisin says it sourced for investors and introduced Global Emerging Markets (GEM) to Centum.
The letter added Centum and its agents sought to bypass the terms of agreement by directly engaging with the introduced investors to the exclusion of Raisin in a bid to deny them the commission.
It added Raisin is entitled to Sh340 million which is two per cent 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,” read the demand letter in part.
However, yesterday Centum denied the existence of such an agreement and warned against what it called an “extortion” plot.
“We are not aware of such an agreement. Let the one making the claim give you correspondences to the same. This may just be someone trying to extort Centum using the media,” Centum Investment CEO James Mworia said.
It has emerged that Raisin may have had an agreement with its subsidiary of Centum Development to raise funds from the Paris offices GEMS but the deal did not materialise.
Mworia added; “I personally took charge of the negotiations of the deal and was not aware of any other party involved. Because we secured the funding, someone now wants to come and claim he had a role in the deal. That’s an imposter.”
According to the firm 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.
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.