Baloobhai purchases Sh101m shares in Carbacid Investments

Billionaire investor Baloobhai Patel has bought an additional five percent stake worth Sh101.7 million in carbon dioxide manufacturer Carbacid Investments #ticker:CARB, raising his ownership to a new high of 40.3 percent.

His holdings have jumped to 102.9 million shares, according to August regulatory filings. This represents a 14 percent increase from July last year when he held 90.1 million shares equivalent to a 35.3 percent equity.

The share purchases have cemented his control in the company whose carbon dioxide business rebounded in the six months ended January.

Carbacid’s second-largest investor is industrial and medical gases manufacturer BOC Kenya with a 5.8 percent stake.

BOC attempted to acquire a majority stake in Carbacid in 2005 as a means of entering the carbon dioxide market but the Capital Markets Authority (CMA) blocked the transaction, citing breach of terms by the proposed acquirer.

BOC’s sales and earnings have dropped substantially in subsequent years, owing to increased competition that has made it difficult for the company to raise prices despite rising costs.

Carbacid is the major producer of carbon dioxide which is used to make fizzy beverages like soft drinks, among other applications. The company has also faced increased competition in recent years from alcohol manufacturers who harvest the gas as a by-product of their production process.

Carbacid reported a 70 percent net profit rise in the half year ended January, helped by higher sales of carbon dioxide and gains in its holdings of listed equities.

The company’s net earnings stood at Sh178.6 million in the review period compared to Sh105.3 million a year earlier.

Sales jumped 16 percent to Sh352.9 million while its stock market portfolio swung to a Sh3.1 million profit from a loss of Sh48 million.

Carbacid says increased taxation risks eroding the margins in its carbon dioxide, adding that it is seeking new areas to invest in.

“Mining royalties and county government demands continue to put more pressure on operations and margins. The group continues to look for new markets and process improvement opportunities and new investment opportunities,” the company said in a statement.