British American Investment Company Limited (British American) launches its initial public offer (IPO) today as it seeks to raise Sh5.58 billion for expansion.
The company will issue 650 million new ordinary shares at Sh9 per share, which will run for three weeks until August 5.
British American’s chairman Nicholas Ashford-Hodges said funds raised would be used to boost the company’s operations in Kenya and expand to regional markets.
“This IPO will give British American an opportunity to increase the scope of its operations and widen its footprint,” said Mr Ashford- Hodges. Last Thursday, the company launched its insurance services business in Uganda through a subsidiary, Britam Insurance Company (Uganda) Limited, which has a capital of Sh197 million (USh5.6 billion).
Mr Ashford- Hodges said the company’s next step would be to open offices in Tanzania, Rwanda, and Southern Sudan.
British American is also the holding company of British American Insurance Company (Kenya) Ltd and British American Asset Managers Ltd (BAAM). At the offer price, the company will have a value Sh19.35 billion — the highest among listed insurance firms.
CfC Insurance Holdings, which got listed at the Nairobi Stock Exchange by introduction in April, was valued at Sh6.85bn as at the close of trading yesterday, Jubilee Holdings Ltd at Sh8.86bn, and Pan African Insurance at Sh1.92bn. The company is also keen on taking advantage of emerging opportunities through innovative products such as micro-insurance and bank-assurance. “We seek to fundamentally redefine the scale and scope of the insurance sector in Kenya and the wider region,” said British American managing director Benson Wairegi.
He said the company would push more products to the retail market and small and medium sized businesses in the region. According to the company’s information memorandum, Sh1 billion will be used for new investments and entry into the regional market while Sh1.3 billion would be used to grow its Kenyan insurance businesses. Part of the Sh1.3bn will also be used to expand the asset management business, including the launch of new funds for Kenyans in the diaspora as well as local and international investors.
The company will also use Sh2.5 billion to set up real estate investment trusts when the proposed law comes into effect and the development of property investments including commercial buildings and housing units.
British American will also use Sh750 million to off set a Commercial Bank of Africa (CBA) loan which had a Sh749.3 million balance as at the end of last December and for which it pays interest at CBA’s base rate less 2.5 per cent.
The balance of Sh300 million will be used on IPO expenses. East African retail investors and their foreign counterparts have been allocated 30 per cent of the shares each, institutional investors 37 per cent while employees, agents and individual life policy holders have been allocated the remaining three per cent.
British American Group posted Sh2.7 billion in profits after tax last year compared to a Sh421 million loss in 2009. The company made Sh4.68 billion in investment income and Sh220 million in other income up from Sh196 million and Sh32 million, respectively.