In June 2023, listed investment firm Centum received a special economic zone (SEZ) licence covering 64 of the 106 acres of its Two Rivers development in Nairobi.
A year down the road, the firm has announced a Sh6.1 billion funding package for the SEZ, which is known as the Two Rivers International Finance and Innovation Centre (Trific), from Africa-focused fund manager Vantage Capital.
Trific chief executive Brenda Mbathi spoke to the Business Daily on the company’s investment plan for the centre with the new capital injection, and the uptake of space at the facility over the past year.
Out of the investment from Vantage Capital, Sh2 billion will be allocated for acquiring and fitting out the Trific North Tower. This 14,975 square metre property will serve as a cornerstone of our SEZ.
The remaining Sh4 billion will be used to develop an additional office tower offering 76,800 square metres of leasable space. This development will provide the necessary infrastructure to support the influx of SEZ enterprises and ensure we meet the demand for high-quality office space.
The design and functionality of the new tower will reflect our commitment to creating a world-class business environment, setting a new benchmark for commercial properties in the region.
What are the terms of the funding? Is it debt or equity investment?
The funding from Vantage Capital is structured as a mezzanine finance investment. This type of funding combines elements of both debt and equity, providing us with the capital required while being less dilutive to our shareholders than pure equity. It allows us to maintain a balanced financial structure, ensuring both stability and growth potential for Trific SEZ.
Mezzanine financing is particularly advantageous as it offers flexible terms and can be tailored to meet the specific needs of the project. This flexibility is crucial for large-scale developments like Trific SEZ, where capital requirements vary significantly.
By utilising this kind of finance, we can optimise our capital structure, manage risks more effectively, and ensure the sustainability of our growth plans.
How many enterprises or organisations have signed up to the EPZ and what are their business focus area?
To date, 14 SEZ enterprises have signed up and secured space in the Trific North Tower. These enterprises operate across various sectors, including business processing outsourcing (BPO), shared services centres, regional headquarters, and investment holding corporations. Collectively, these enterprises are expected to create approximately 10,000 jobs and attract foreign direct investment amounting to about $65 million. The space is currently 70 percent committed by these enterprises in the Trific North Tower.
What is your strategy for the SEZ now that you have the new funding?
The strategy is to leverage the new funding to enhance and expand our infrastructure, creating a more attractive and efficient environment for businesses.
Our strategic location within Nairobi’s prestigious diplomatic blue zone provides access to key markets and international business hubs. The SEZ framework in Kenya also offers various strategic incentives, including fiscal tax incentives, which are critical in reducing operational costs and enhancing profitability for businesses operating within Trific SEZ.
Trific SEZ, therefore, offers an ecosystem designed to provide businesses with a competitive edge. This includes world-class infrastructure, advanced technology, and a regulatory framework conducive to business growth.
By fostering an integrated live-work-play ecosystem, we aim to attract a diverse range of businesses and talent, ensuring they have the resources and support needed to thrive.
The Kenya Finance Bill 2024 has proposed to exempt property transfers within an SEZ from capital gains tax. What would be the impact of such an exemption on the competitiveness of Kenyan SEZs?
The exemption from capital gains tax on property transfers within an SEZ that was proposed in the Finance Act was essentially a clarification, as capital gains tax exemption is already allowed within the SEZ Act and it is a significant financial benefit for special economic zones.
This exemption creates a more attractive investment environment for current and potential SEZ enterprises. By reducing the financial barriers associated with property transfers, we can facilitate smoother and more efficient transactions, encouraging more businesses to establish and expand their operations within the SEZ space.
This financial flexibility is crucial in maintaining our competitive edge and ensuring the long-term success of SEZs in Kenya.
These are incredibly exciting times for Special Economic Zones in Kenya. The opportunities we are creating will not only benefit businesses but also contribute to the broader socio-economic landscape, fostering innovation, job creation, and sustainable growth that continue to set new benchmarks for excellence and competitiveness in the region.
