Sanlam Pan Africa buy sparks sell-offs

• The company’s share price has gained 35.8 per cent to trade at Sh36 on Friday from Sh26.5 on April 26 when majority shareholder Sanlam Limited announced plans to raise its stake from 50 per cent to 60 per cent through its local subsidiary Hubris Holdings.
• According to regulatory filings by Pan Africa to the Capital Markets Authority, institutional investors reduced their shares to 60.5 million (63 per cent) in June from 67.5 million (70.3 per cent) in December.
• Among the institutional investors that have exited or reduced their shareholding in the company are Kacher Kenya Limited and Apollo Life Assurance.
• Kacher, which held 5.2 million shares in Pan Africa in December, has now disappeared in the June list of top shareholders. Apollo’s shareholding dropped from 732,514 to 621,490 in the same period.
• Kenyan individual investors raised their shares from 27.3 million in December to 33.9 million in June at a cost of about Sh171 million based on the average share price of Sh26 in the period. This raised their stake from 28.4 per cent to 35.3 per cent.
• Pan Africa’s shares have been traded in several blocks in recent months, including the sale of 45,100 shares on May 4, 83,200 (May 17), 53,900 (May 24) and 90,500 (June 28).

Institutional investors have sold 6.9 million shares or 7.2 per cent of Pan Africa Insurance Holdings in what market watchers attributed to profit-taking ahead of an expected reduction of liquidity in the stock.

The company’s share price has gained 35.8 per cent to trade at Sh36 on Friday from Sh26.5 on April 26 when majority shareholder Sanlam Limited announced plans to raise its stake from 50 per cent to 60 per cent through its local subsidiary Hubris Holdings.

Institutional investors appear to be cashing in on the price rally, as it offers them a good exit as the number of tradable shares is set to reduce significantly on Sanlam’s move, hampering price discovery.

According to regulatory filings by Pan Africa to the Capital Markets Authority, institutional investors reduced their shares to 60.5 million (63 per cent) in June from 67.5 million (70.3 per cent) in December.

“The share price rally has given institutional investors a good opportunity to exit,” said Fred Mweni, a director of Tsavo Securities.

“The proposed higher stake of Sanlam will reduce liquidity and affect price discovery. This means that those holding the stock now are likely to be locked in for a longer time than they may wish,” he said.

Among the institutional investors that have exited or reduced their shareholding in the company are Kacher Kenya Limited and Apollo Life Assurance.

Kacher, which held 5.2 million shares in Pan Africa in December, has now disappeared in the June list of top shareholders. Apollo’s shareholding dropped from 732,514 to 621,490 in the same period.

The institutions are mainly selling to local individual investors whose purchases analysts attribute to speculation about Sanlam’s move to buy an additional 9.6 million in the insurer to gain control of its strategic direction.

Kenyan individual investors raised their shares from 27.3 million in December to 33.9 million in June at a cost of about Sh171 million based on the average share price of Sh26 in the period. This raised their stake from 28.4 per cent to 35.3 per cent.

“The retail investors are positioning themselves to gain from the majority shareholder’s bid to raise its stake in the near future,” Mr Mweni said.

Pan Africa’s shares have been traded in several blocks in recent months, including the sale of 45,100 shares on May 4, 83,200 (May 17), 53,900 (May 24) and 90,500 (June 28).

The reduced stake of institutional investors — excluding Hubris — from 20.3 per cent to 13 per cent means that Sanlam is likely to buy a significant number of shares from the individual investors who may gain from further price gains.

Hubris bought only 6,700 more shares, raising its stake marginally to 50.01 per cent from 50 per cent. It is expected to buy the remaining 9,593,300 shares at the Nairobi bourse in the short term.

“The offeror has limited its intention to acquiring an additional interest (over and above the offeror’s current interest) in the proposed offeree to a further 10 per cent,” Hubris said in a statement, adding it will buy the remaining shares from willing sellers on NSE.