Britam eyes bond in expansion drive

Britam group MD Benson Wairegi. The firm has been expanding. Photo/DIANA NGILA
Britam group MD Benson Wairegi. The firm has been expanding. Photo/DIANA NGILA 

Financial services group Britam is set to enter the bonds market to raise funds for its expansion drive as soon as it gets the green-light from regulators.

The listed firm, whose core business is insurance, said it was targeting the issuance of a corporate bond to help it enter new markets and diversify investments.

“We are seeing great opportunities in the region in areas of property, private equity and expansion into new markets… the new funding will therefore help us tap emerging opportunities across the region in tandem with our business strategy,” said Britam chief executive Benson Wairegi in a statement.

Britam has appointed Dyer and Blair Investment Bank Ltd as the lead arranger and placing agent, PwC is the reporting accountant, Coulson Harney the legal advisor and Image Registrars Ltd the fiscal agency and registrar.

The group said it will release finer details, such as when the bond will be ready and how much it plans to net, at a later date.

Analysts, however, said the amount could be over Sh3 billion based on the firm’s allusion of how much it will need to expand into new markets and increase its property portfolio when it issued its 2013 financial results.

“They indicated that their next strategic fit is into real estate and entry into southern Africa markets. The amount they would be looking to raise would be substantial, may be more than Sh3 billion,” said Geoffrey Maina, a research analyst at Old Mutual Securities.

Britam has been on an expansion binge that saw it buy into other insurers as well as develop buildings and shopping malls. The insurance firm bought a 99 per cent stake in Real Insurance and a 25 per cent share in property development and management firm Acorn.

Construct shopping mall

In addition, it is also mulling over a 30 per cent purchase in Continental Re, a fully-owned subsidiary of Lagos-based Continental Reinsurance.

On the property front, the firm is putting up a 31-storey complex in Upper Hill, Nairobi, and has announced plans to construct a shopping mall along Mombasa Road.

The performance of the latest corporate bonds also makes the timing right for Britam, according to analysts.

“The market for corporate bonds has been full of activity and looking at one of the latest ones, I&M, the bond was fully subscribed. The appetite for corporate bonds is high,” said Ms Agnes Atieno, a research analyst at Sterling Capital.

I&M Bank’s corporate bond of late 2013 was oversubscribed by 21.8 per cent, attracting bids worth Sh3.6 billion against the Sh3 billion it had targeted.