British American Investments Company (British American) is targeting to raise up to Sh7 billion through an initial public offering (IPO), making it nominally the largest such issue by a private firm.
Previously, partly State-owned KenGen and Safaricom raised Sh7.8 billion and Sh50 billion respectively.
The announcement came a day after Trans-Century Ltd owners resolved to list by introduction by year-end with Nairobi Stock Exchange targeting five listing in 2011.
British American’s group managing director Benson Wairegi said the holding company of British American Insurance Company (Kenya) Ltd, British American Asset Managers Ltd and Britam Insurance Company (Uganda) Ltd hoped to complete the IPO by the end of June.
The IPO, which is awaiting approval by the Capital Markets Authority, may make British American the first firm to list on the exchange since October 2008 when Cooperative Bank raised Sh5.4 billion by floating 701 million shares.
Prior to that, Safaricom had raised Sh50 billion in June of the same year by floating 10 billion shares.
“Subject to the approval of the appropriate authorities, we will be floating British American Investment Company which is the holding company of the three companies,” said Mr Wairegi.
“We haven’t yet concluded the process and discussions are still taking place but we think it will be in the range of Sh6 billion and Sh7 billion. It will be decided by the board that will come up with a crystal clear amount”.
He said that the money will be used for expansion locally and regionally. The company recently started operating in Uganda.
“This IPO will indeed give us an opportunity to increase the scope of our operations and widen our footprint,” said Mr Wairegi.
“Having recently opened operations in Uganda, our strategic intent is to spread our wings even further to the rest of East Africa,” he said.
Last week, British American issued a cautionary statement saying it was seeking CMA’s approval to privately transfer 16.25 million shares of Housing Finance Company of Kenya (HFCK) shares it holds to British American Insurance Company to help it meet compliance requirements.
“The holding company proposes to transfer the ordinary shares to the insurance company as part of its restructuring process, which is aimed at meeting the insurance company’s compliance requirements under the insurance act, as far as its asset investment limits are concerned,” it said in a statement.
Mr Wairegi said the move was not related to the share issue and that all of HFCK’s shares would now appear under one company as opposed to two under the same holding company.
NIC Capital and KPMG Kenya have been appointed as the joint lead transaction advisors and Standard Investment Bank and Kestrel Capital are the joint lead sponsoring stock brokers.
PricewaterhouseCoopers (PwC) will be the reporting accountants while Hill & Knowlton and Scanad Kenya will handle the public relations and advertising respectively.
Daly & Figgis, Advocates are the legal advisers.
In 2009, British American registered a consolidated loss before tax of Sh334 million compared to a Sh340 million profit in 2008 due poor performance of the NSE, which registered a 34 per cent decline.
The group, in its last annual report said that the decline affected the investment income of the asset management company’s equity portfolio which resulted in a Sh574 million unrealised loss, causing a 23 per cent decline in revenue to Sh118 million in 2009 from Sh154 million in 2008 and a loss after tax of Sh26 million.
The new capital raised will be used to drive the firm’s ambitious growth strategy, said Nicholas Ashford-Hodges chairman, board of directors British American.