UAP capitalisation now at Sh38 billion with chairman Joe Wanjui worth Sh7.78 billion after the buyout. PHOTO | FILE |
What you need to know:
Old Mutual raised its stake in UAP to 60.66 per cent following an agreement to buy a 37.33 per cent stake held by three private equity firms, at Sh180 a share.
Britam is the most valued among the listed insurance firms with a market capitalisation of Sh57.66 billion at a share price of Sh29.75.
Unlike the listed firms, calculating the valuation of other insurance firms has been difficult, given that they are under no obligation to publicise their assigned share values.
The sale of stakes in UAP Holdings to Old Mutual by key shareholders has valued the over-the-counter (OTC) stock at Sh38 billion, nominally catapulting it to second after Britam.
Old Mutual raised its stake in UAP to 60.66 per cent following an agreement to buy a 37.33 per cent stake held by three private equity firms, at Sh180 a share.
UAP has a total of 211.4 million shares which are traded on the Nairobi Securities Exchange OTC.
UAP had earlier stated it plans to list in the market second-half 2015 and the valuation is an indicator it could easily close in on the market leader if exposed to mass trading.
ABC Capital corporate finance manager Johnson Nderi said the dynamics driving the price of the insurer on the OTC market are different from those pushing the listed ones meaning UAP could make gains.
“At the time that a company that is trading on the OTC comes in for listing it would see a price gain once the risk premium that is usually attached to non-listed firms goes down,” he said.
“However, if investors were paying too much of a scarcity premium for the share on the OTC due to expectation of multiple gains once it is listed, the process of price discovery might go against the stock given that scarcity often goes away with listing.”
Britam is the most valued among the listed insurance firms with a market capitalisation of Sh57.66 billion at a share price of Sh29.75.
Jubilee Holdings is next with a valuation of Sh27.5 billion at Sh459 per share, followed by CIC Insurance which is valued at Sh26 billion at a share price of Sh9.95. Liberty Holdings, Kenya Re and Pan Africa Insurance are valued at Sh12.45 billion, Sh12.21 billion and Sh11 billion respectively.
Unlike the listed firms, calculating the valuation of other insurance firms has been difficult, given that they are under no obligation to publicise their assigned share values.
This has made it hard to arrive at a fair comparison of valuation between listed and non-listed insurers. Some disclose the valuation when key investors are buying or selling stakes or when making material disclosures while seeking debt through the capital markets.
In terms of assets though Jubilee led the listed firms in the half year to June 2014 at Sh68.9 billion, followed by Britam at Sh55.15 billion and Liberty at Sh31.8 billion. Kenya Re assets stood at Sh29.8 billion, those of Pan Africa at Sh22.9 billion and CIC at Sh16.6 billion.
UAP assets at the end of 2013 stood at Sh33.1 billion. Its share was priced at Sh86 on the OTC just six months ago, meaning it has doubled going by the latest buyout.
The rise is largely consistent with those enjoyed by the listed insurers which enjoyed big gains in 2014, led by Britam (up 96 per cent), CIC (61 per cent), Jubilee (60 per cent) and Liberty (54 per cent).
After the deal is done, chairman Joe Wanjui through Bawan Ltd will be the second largest owner at 20.46 per cent valued at Sh7.78 billion.
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