PE funds acquire 40 per cent of UAP group for Sh4.7bn
Some of UAP’s major shareholders are businessman Joe Wanjui, who had a 35.84 per cent stake in December 2010, Centum Investment (24.2 per cent), Chris Kirubi (16.88 per cent) and its group managing director James Muguiyi (10.53 per cent). Dr Wanjui is the chairman of the company.
UAP Insurance Group has raised Sh4.7 billion from the sale of shares to three private equity funds to finance its expansion as it eyes listing on the Nairobi Securities Exchange (NSE) in two years.
It will see Aureos Africa Fund, AfricInvest Fund and Swedfund International AB acquire shares equivalent of a 40 per cent stake in a deal that values the regional insurer at Sh11.75 billion.
The funds will help UAP spread its reach across Africa and deepen its activities in the region’s red hot property market, diversifying its portfolio away from the equities market.
This will reduce the insurers’ appetite to list at Nairobi bourse—where it had planned an IPO last March—and has now applied to the Capital Markets Authority (CMA) to raise Sh750 million through a public offer slated for August.
“We created shares to accommodate the new shareholders,” said Dominic Kiarie, the deputy managing director of UAP Insurance in an interview with the Business Daily.
“Will use the cash to strength our Pan African expansion and ensure a balanced and optimum investment portfolio with a focus on real estate. “We plan to list at the NSE in 12 to 24 months since we now keen on the public offer,” said Mr Kiarie.
Some of UAP’s major shareholders are businessman Joe Wanjui, who had a 35.84 per cent stake in December 2010, Centum Investment (24.2 per cent), Chris Kirubi (16.88 per cent) and its group managing director James Muguiyi (10.53 per cent). Dr Wanjui is the chairman of the company.
UAP intends to enter into three new markets—Rwanda, Tanzania, and the Democratic Republic of Congo (DRC) before the end of the year. This will increase its presence in East Africa following its entry into South Sudan in 2006 and Uganda in 2004.
The foray into DRC, however, depends on whether or not the pending change in legislation is realised, allowing for registration of private insurance companies.
In Rwanda, it is keen on starting operations from scratch while in Tanzania it is going for an acquisition. Mr Kiarie said negotiations for the buyout are at an advanced stage and refused to give details on the targeted bank and the stake its eyeing.
UAP’s investment options are limited to real estate in a region whose financial markets are still under-developed.
The insurer is set to launch an asset management subsidiary by end of June, under which it will develop a real estate investment trust (Reit) to be used in developing a land bank in strategic areas.
Under the property fund, investors can exit through selling their shares to third parties who will earn a return from disposal of houses, office blocks, and rental income.
The rise in home prices and rents has seen property emerge as a prime investment vehicle in step with bonds and equities asset classes. The sector is riding on nearly three decades of under investment in the mid-tier housing segment.
Current properties owned by UAP include Telkom Plaza, Union House, and Equity Centre.
Funds raised will go towards building a 30-storey commercial building in Kenya to be completed in 2014, constructing a business park in Uganda comprising of four towers of eight storeys each set for completion in October, and putting up a 12-storey building in Juba in a joint venture with the State of Central Equatorial’s local authority.
Under the property fund, investors can exit through selling their shares to third parties who will earn a return from disposal of houses, office blocks, and rental income.
The new investors--who have preference for investing in small and medium enterprises--intend to exit the insurance company through the NSE. UAP net profit stood at Sh 919 million last year compared to Sh678 million in 2010.
AfricInvest opened shop in Kenya IN October 2009 and is eyeing stakes in midsized companies in telecoms, agribusiness and hotel industry. It has concentrated its investments in West and North Africa and is now seeking a piece of East Africa where it bought a 22 per cent stake in Family Bank.
Sweden-based Swedfund International AB prefers to invest in emerging markets of Africa, Asia and Latin America while Aureos Africa Fund has regional office in Nairobi.
PE funds have intensified their activities in Kenya’s insurance market after last year’s purchase of a 25 per cent stake by Leapfrog and a controlling stake in AAR Holdings by Dutch Fund—Investment Fund for Health Africa.
