Insurance company Britam has just listed 360 million new shares in the Nairobi Securities Exchange (NSE) representing a 14.3 percent stake in the company which has been sold to private equity investments firm AfricInvest for sh 5.7 billion.
Speaking on the deal, Africainvest Managing Director (MD) George Odo said that the company recognised Britam as a market leader and hoped that the investment would help them achieve the objectives in their 2016-2020 strategy.
The AfricInvest stock purchase agreement was arrived at last year after Britams shareholders agreed to the sale at a price of sh15.85 per share. The price was in line with conditions set by International Finance Corporation (IFC), the preceding buyer of Britam’s shares; which required Britam not to sell new shares at a price lower than sh15.85 which IFC had paid for its own shares. IFC’s conditions also capped Britams ability to raise capital from the sale of new shares at sh6 billion.
Such conditions are common in share acquisition agreements to prevent dilution in value for the purchaser. AfricInvest has also followed suit with its own conditions requiring Britam’s majority shareholders including James Mwangi, Peter Munga, Jimnah Mbaru and Benson Wairegi to maintain a combined share ownership equivalent to AfricInvest’s stake in Britam for up to two years.
Britam is listed in the Nairobi Securities Exchange (NSE) and after the sale, the company’s stock remained largely unaffected finishing Monday (the day of listing the new shares) with a share price of sh13.95 which still lies within its 52-week average price of sh10-16. The company was established as financial services corporation in 1965 and has a since diversified its portfolio. AfricInvest, on the other hand, manages $ 1 billion dollars across 14 funds and has invested in UAP, Brookehouse schools, Family Bank, SilaAfrica Plastics in addition to Britam.
The money from the sale will be used across Britam’s key focus areas of insurance, asset management and property development as the firm seeks to incorporate technology into its service delivery.