Companies

SA firm gets nod for controlling stake in Pan Africa Insurance

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South Africa-based Sanlam Limited is set to acquire additional shares in Pan Africa Insurance to get a controlling stake that would give it a free hand in re-organising the Kenyan insurer. Photo/FILE

The Competition Authority has cleared the way for South Africa-based Sanlam Limited to acquire additional shares in Pan Africa Insurance to get a controlling stake that would give it a free hand in re-organising the Kenyan insurer.

Sanlam currently has about 50 per cent stake in the listed insurer. It said in May that it was seeking to raise its stake to 60 per cent by acquiring additional shares — estimated at 9.6 million and which are worth Sh268 million at the current market price.

READ: SA firm seeks full control of Pan Africa

The nod from the Competition Authority now paves the way for the South African firm to buy additional stock, whose trading price has increased 93 per cent over the past year to Sh40.25.

ALSO READ: Pan Africa shares rise on news of acquisition plan

“In exercise of the powers conferred upon the Competition Authority by section 46 (6) (a) (ii) of the Competition Act, the Competition Authority hereby authorises the proposed acquisition of further shares in Pan Africa Insurance Holdings Limited by Hubris Holdings Limited,” Wang’ombe Kariuki,  the acting director-general of the Competition Authority said in the December 21 Kenya Gazette notice. 

The company said the bigger stake would give it enough voting rights to make material changes, a pointer to a shake-up of the Pan Africa Insurance board and a review of its business operations.

Deal making

The only shareholder with a stake that is more than 10 per cent besides Sanlam is businessman Baloobhai Patel with 20 per cent.

Kancher Kenya is third with 5.43 per cent and Thammo Holdings comes fourth with 1.45 per cent.

Kenya’s insurance law does not allow a foreign investor to own more than two thirds or 66 per cent of an insurer.

Sanlam is the largest insurer based in South Africa by market value and its quest for a bigger role in Kenya’s insurance market comes when its rival, Liberty Holdings, through CFC Life, is also seeking a larger piece of the local market.

Kenya has faced increased deal making in the insurance sector in the past year including the exit of Pan Africa Insurance from APA Insurance, purchase of a 60 per cent stake in AAR by a Dutch fund and PE fund Leapfrog acquisition of a 25 per cent stake in Apollo Investments.

Pan Africa’s net earnings dropped by 24.7 per cent last year to Sh443 million.