UAP Holdings eyes acquisition of African insurer for Sh300m
What you need to know:
UAP’s expansion plans signal increased deal-making by local insurers that are making acquisitions, mergers, or share sales to strategic investors in search of growth in the regional market.
UAP currently operates in six markets, Kenya, Uganda, Rwanda, South Sudan, DRC and Tanzania where it ventured into last year with a 60 per cent acquisition of Century Insurance.
The Sh300 million investment in a new market will leave UAP with a Sh1.7 billion balance that the company will use in its current operations including insurance and property ventures.
Financial services firm UAP Holdings is set to invest Sh300 million to acquire an insurance firm in the regional market as part of its Pan African expansion plans.
“There are plans to venture into one more market this year, preferably through acquisition,” said a source privy to UAP’s expansion details, but who declined to mention the target country.
The company currently operates in six markets, Kenya, Uganda, Rwanda, South Sudan, DRC and Tanzania where it ventured into last year with a 60 per cent acquisition of Century Insurance.
UAP’s expansion plans signal increased deal-making by local insurers that are making acquisitions, mergers, or share sales to strategic investors in search of growth in the regional market.
AAR Insurance recently sold a 12.29 per cent stake to a consortium led by Johannesburg-listed Afrocentric for an estimated at Sh245 million.
Nairobi Securities Exchange (NSE)-listed Britam is set to complete its 99 per cent acquisition of Real Insurance in a stock-and-cash deal worth Sh1.3 billion.
Frankfurt-based African Development Corporation (ADC) is also scouting for a buyer of its 38.74 per cent stake in Resolution Insurance as it divests to focus on the banking sector.
For UAP, the expansion in the region is part of its plans to present a larger company to the public at the NSE where it plans to list by introduction in the second half of next year.
The Sh300 million investment in a new market will leave UAP with a Sh1.7 billion balance that the company will use in its current operations including insurance and property ventures.
UAP has earmarked Sh400 million to expand the branch network of its Tanzanian subsidiary where it acquired a 60 per cent stake last year for Sh72.1 million (TSh1.3 billion). The acquisition saw UAP rename the company from Century Insurance to UAP Insurance Tanzania Limited. The new Sh400 million investment brings the company’s total investment in the Tanzania unit to nearly Sh1 billion.
UAP’s bond prospectus shows the company has disbursed a separate $4.7 million (Sh409.7 million) to the subsidiary in exchange for redeemable preference shares.
The company says it sees opportunity in Tanzania’s economic growth that is expected to expand demand for general insurance products which its subsidiary in that market is offering.
UAP has also earmarked Sh100 million to fund the setup of a life insurance business in Uganda. The firm recently split its insurance operations in Uganda, forming a separate entity to sell life insurance policies.
