Britam stock hit hard by Mauritian ex-director’s fall
Britam group MD Benson Wairegi with former director Dawood Rawat. The government of Mauritius in April seized Mr Rawat’s 20.3 per cent stake in the insurer after accusing him of running a multibillion-shilling Ponzi scheme. PHOTO | FILE
What you need to know:
The government of Mauritius in April seized Mr Rawat’s 20.3 per cent stake in the insurer after accusing him of running a multibillion-shilling Ponzi scheme in the island nation.
Mauritius is reportedly said to be looking to sell the Britam stake for at least $118 million (Sh12 billion). This implies a premium of nearly 150 per cent on Britam’s current price.
Britam’s share price fall has widened the premium targeted by Mauritius, making the sale of BAKHL harder since a prospective buyer can get lower prices in the open market.
The sudden fall from grace for Britam’s single biggest shareholder, Mauritius national Dawood Rawat, dealt a hard blow to the NSE-listed firm’s stock, which this week hit Sh12.90 apiece – near its one-year low of Sh12.30.
The government of Mauritius in April seized Mr Rawat’s 20.3 per cent stake in the insurer after accusing him of running a multibillion-shilling Ponzi scheme in the island nation.
At the time the insurer was trading at Sh26 per share. The stock’s steady drop partly reflects uncertainty over the ultimate fate of the raging controversy.
Mauritius is reportedly said to be looking to sell the Britam stake for at least $118 million (Sh12 billion). This implies a premium of nearly 150 per cent on Britam’s current price.
Mr Rawat’s interest in the insurer is held through the investment vehicle British-American (Kenya) Holdings Limited (BAKHL), in which he has an 85.2 per cent interest.
It is unclear whether the asset seizure has affected the interests of his partners in BAKHL, including Joe McClaugherty who owns 14.2 per cent of the investment vehicle and consequently three per cent of Britam’s shares.
Wealth fund
The island nation has reportedly hired a South African bank to look for a buyer for the Britam shares. If none is found, the stake will be sold to Mauritius’ upcoming sovereign wealth fund.
Mr Rawat has meanwhile termed the asset seizures as illegal and warned against the sale of the same, including the Britam stake.
The businessman, who also holds French citizenship, had threatened to sue the Mauritius government in France if the parties would not have reached an agreement by the now-lapsed deadline of September 8. Mauritius has, however, ignored Mr Rawat.
It was not immediately clear whether the fugitive businessman has instituted the legal measures to reclaim his assets.
If the controversy is settled, it will calm investors’ nerves given BAKHL’s dominant stake in Britam. As things stand, issues like BAKHL’s true ownership and its participation in the insurer’s management and strategy are in a legal limbo.
Britam, for instance, had proposed to delete BAKHL’s veto powers as far as the appointment of the insurer’s CEO and finance director is concerned as part of special resolutions ahead of its AGM in June.
The company later dropped the proposal, underlining the uncertainty brought about by the upheaval in Mr Rawat’s business empire.
Britam’s share price fall has widened the premium targeted by Mauritius, making the sale of BAKHL harder since a prospective buyer can get lower prices in the open market.
The insurer has issued a profit warning for the year ending this month, anticipating that its net earnings will fall by at least 25 per cent compared to Sh2.4 billion the year before.
