British-American aims to raise funds from an initial public offering at Nairobi Stock Exchange for its regional expansion. File
British-American Investments Company (British-American) is seeking to raise Sh5.85 billion from the market for its expansion through an initial public offering (IPO).
The Capital Markets Authority (CMA) has approved the share issue in which British American seeks to sell 30.23 per cent or 650 million shares to the public. The issue will run for three weeks starting July 12 and ending on August 5, this year.
“We believe the offer price of Sh9 is affordable and will appeal to many investors,” said Benson Wairegi British American Group’s managing director.
British-American Investments is the holding company of British American Insurance Company (Kenya) Limited and British American Asset Managers Limited (BAAM). It recently started operations in Uganda through another subsidiary — Britam Insurance Company (Uganda) Limited.
At the offer price, the company will have a value Sh19.35 billion — the highest among listed insurance firms.
As at the close of trading Tuesday, CfC Insurance holdings, which got listed at the Nairobi Stock Exchange by introduction in April this year was valued at Sh7.9 billion, Jubilee Holdings Limited at Sh8.86 billion and Pan African Insurance at Sh2.05 billion. The share issue will dilute the stake of the eight major shareholders to 69.78 per cent. The eight are required to hold their stake in the company for the next two years, at least.
“Whilst the Group is already over 60 per cent owned by Kenyan investors, this IPO will reinforce its position as a truly Kenyan financial institution,” said Mr Wairegi. He said the funds would help the company take advantage of emerging opportunities through innovative products and distribution channels such as micro insurance and bancassurance. The firm plans to use the funds to open offices and expand operations in Tanzania, Rwanda and Southern Sudan.
The company is banking on the low insurance penetration in Kenya, which has remained at 2.84 per cent of the gross domestic product and an even lower penetration in Uganda and Tanzania to grow its revenues.
Its other subsidiary — BAAM at the end of 2010 saw its assets under management hit Sh9.23 billion toppling Old Mutual, which had Sh8.7 billion. British-American Group posted Sh2.7 billion in profits after tax in 2010 compared to a Sh421 million loss in 2009, which was mainly attributed to the poor performance of the stock exchange in 2009. In 2010 the firm realised Sh4.68 billion in investment income and Sh220 million in other income up from Sh196 million and Sh32 million, respectively.
The CMA also approved the listing by introduction of 417.96 million shares of TransCentury Limited on the Alternative Investment Market Segment of the NSE. The two new listings will bring the number of listed firms at the bourse to 58, lifting the value of all companies listed to Sh1.5 trillion.
Although specific details of TransCentury’s shares are not yet out, Goodson Capital Partners, a South African-based strategy and research firm last week said the company’s value stood at Sh12.5 billion and placed its share value at Sh47.
