CIC Insurance Group chief executive Nelson Kuria speaks during the release of the insurer’s results for the year ended 2013 at the InterContinental Hotel in Nairobi in March. PHOTO | FILE
What you need to know:
The five-year bond was heavily oversubscribed with the firm receiving Sh6.34 billion bids, more than two times the Sh3 billion targeted under the first tranche alone.
The listed firm said it would exercise the “green shoe” option to raise the required Sh5 billion and scrap the next phase.
CIC Insurance has opted to absorb Sh5 billion at once after overshooting the amount targeted under a two-phase bond in the first offer.
The five-year bond was heavily oversubscribed with the firm receiving Sh6.34 billion bids, more than two times the Sh3 billion targeted under the first tranche alone.
The listed firm said it would exercise the “green shoe” option to raise the required Sh5 billion and scrap the next phase.
“We had subscription from across all market segments among them local institutional investors, financial institutions, the insurance sector and the general public,” CIC chief executive Nelson Kuria said in a statement.
“As a result the company will exercise the green shoe option and accept an additional Sh2 billion from the total amount raised.”
The information memorandum says that Sh3 billion was to be raised first with the remaining Sh2 billion sought in 2015.
CIC has already identified ready projects where the funds would go, including a medical facility which has been allocated Sh800 million.
The firm plans to enter the healthcare business through a strategic partner to put up a facility to offer quality medical services for patients in both the upper and low-end markets.
The healthcare industry is attracting both local and international underwriters. The segment has relatively been underserved on the breakdown of State-run health facilities.
Grameen Foundation, MicroEnsure, and Penda Health recently launched Uzima Project, an insurance programme targeting healthcare for the low- and middle-income end of the market.
The project announced on Monday it is expected to add some 150,000 customers over the next two years.
The insurer said it would roll out all its programmes immediately using the bond proceeds. Real estate, recapitalisation and regional expansion will take up the remainder Sh4.2 billion.
CIC becomes the fourth bond issue to be oversubscribed and the third firm to exercise the green shoe option.
NIC accepted Sh5 billion in September after its Sh3 billion bond received Sh6.5 billion in offers while the Britam bond attracted Sh7.4 billion against the Sh3 billion planned in the first tranche.
The latter settled for Sh6 billion. UAP’s Sh2 billion bond attracted offers worth Sh3.19 billion.
Analysts said on top of high liquidity, interest rates on corporate bonds are more attractive than the Treasury bonds of comparable tenor, making them attractive to investors.
“The oversubscription was expected because the bond has better returns than government bonds,” said Agnes Achieng, research analyst at Sterling Capital.
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Note: The results are not exact but very close to the actual.
