Britam eyes regulator approvals to finalise Real buyout

Financial services group Britam is counting on getting approvals from market regulators in Malawi, Tanzania and Mozambique to pave the way for conclusion of the Sh1.4 billion acquisition of Real Insurance in the next two weeks.

The company has so far received approvals from Kenyan regulators and says a similar green light from the other countries will see them complete the transaction by mid-July.

In order to complete the deal, Britam has to get approvals from the insurance commissions as well as capital market regulators and competition authorities in all four countries where Real Insurance has operations.

Real Insurance Malawi shareholders were on Thursday last week asked to vote on the intended buyout, one of the pre-requisites for the country’s capital markets regulator to give its go-ahead for the deal.

“We had hoped to receive the approvals faster but that was just our expectation; the regulators have their own time table,” said Benson Wairegi, the chief executive officer of Britam at the company’s AGM on Friday.

“We now expect to fully complete the deal in two weeks because what is remaining are very minor details. By middle of next month, we should be done with the transaction and paid Real shareholders.”

The buyout of rival Real Insurance will see Britam pay Sh825 million in cash and issue new shares worth Sh550 million to the shareholders of the 36-year-old insurer. The merging of the two insurance businesses will see Britam, which currently has a presence in Kenya, South Sudan, Rwanda and Uganda, add three more countries to the fold.

Mr Wairegi also noted that despite anticipating that they will close the deal by mid of next month, the two entities could still operate independently for as long as two years. This, he said, was the estimated period within which the two companies would be fully integrated.

To advice the company on how best to go about with the integration, Britam says it contracted consulting firm McKinsey three weeks ago. “What we have started now is meetings between Britam, Mckinsey and Real in order to first understand what happens immediately we complete the transaction,” said Mr Wairegi.

“We are discussing things like appointment of directors as well as things like who will be the signatories of bank accounts. These critical Day One activities are what McKinsey is currently helping us with.”

McKinsey will also help oversee the overhauling of IT systems, rebranding of assets, synchronising quotations and more importantly advise Britam on how to deal with the extra employees and assets in Kenya.