Nairobi. The International Finance Corporation (IFC) is set to invest KSh3.5 billion in acquiring a 10.37 per cent stake in insurance group Britam.
The Nairobi Securities Exchange-listed firm said the proposed transaction –which will see the allocation of 224.1 million new ordinary shares to IFC— is subject to approvals from regulators and shareholders. “The proposed subscription is subject to conditions that are customary to transactions of this nature, including receipt of shareholders’ approval and regulatory approvals,” Britam said in a statement.
The insurer did not indicate how it would invest the cash realised in the share sale. The company last raised Sh6 billion in 2014 through a corporate bond, which will be redeemed in July 2019.
Britam’s recent major investment has been the construction of Britam Tower in Nairobi’s Upper Hill, which has a space of 30,000 square metres.
The entry of IFC, whose offer price of Sh15.85 represents a 58.5 per cent premium on the insurer’s closing price of Sh10 on Friday, will dilute existing shareholders by 10.3 per cent. The investment comes after a major decline in the company’s share price from a record high of Sh40 in September 2014.
Britam could see the entry of another institutional investor as its largest single shareholder Peter Munga prepares to dispose of a 23.3 per cent stake in the firm by mid next year. Mr Munga, who already held a 16.96 per cent interest, acquired the extra 23.3 per cent equity from the government of Mauritius, which seized it from its citizen Dawood Rawat. Mr Rawat was accused of running a Ponzi scheme in the island nation. Besides a relatively lower share price, IFC is also buying into Britam at a time when the company and other underwriters are set to benefit from mandatory purchase of marine insurance from the local market. Marine insurance business in Kenya has hitherto been dominated by foreign underwriters but local firms –starting this month— are now sharing the premiums estimated at Sh20 billion every year.