Markets & Finance

CIC targets Kajiado, Kiambu properties with Sh1.7bn

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CIC Insurance Group CEO Nelson Kuria. PHOTO | FILE

CIC Insurance plans to invest majority of proceeds from its Sh5 billion bond in real estate.

The information memorandum on the bond issue says investment in property will amount to Sh1.7 billion or roughly a third of the Sh5 billion the insurer is planning to raise.

Regional expansion will take up Sh1.3 billion, recapitalisation and other corporate activities Sh1.2 billion while an undisclosed medical project will use the balance of Sh800 million.

The company has already identified ready projects where the Sh1.7 billion will be deployed.

“A real-estate blue print that will guide the group in developing its 712 acres of land in Kiambu and Kajiado Counties is in the process of completion. The group will undertake commercial and residential developments on these parcels of land,” says the information memorandum.

CIC has already made investment in the property sector with its office block located in Upper Hill, Nairobi.

“The group, in its endeavour to strengthen its financial base, has already completed construction of CIC Plaza II, a 12-floor twin tower investment with an expected rental income of Sh100 million, with a return on investment of eight per cent,” says the information memorandum.

READ: CIC Insurance seeks Sh3 billion for real estate projects

The bond will be sold in notes of Sh100,000 that will then be listed on the Nairobi Securities Exchange (NSE).

The opening date for the bond offer, the interest rate and other related information will be known once the pricing supplement is finalised.
Fixed-income analysts said currently there is sufficient liquidity in the market to favour such issues.

Alex Muiruri, head of fixed income trading at Kestrel Capital, said the liquidity is coming from the maturity of 91-day and 182-day Treasury bills adding that investors are opting to reinvest this cash in long-term bonds.

“Given the trends currently a lot of excess liquidity is being driven into higher yielding corporate debt that’s priced at premiums of 150 basis points above current five-year Treasury bond yields (10.99 per cent),” said Mr Muiruri.

NIC Bank managed to attract Sh6.5 billion for its bond offer targeting to raise Sh3 billion. The lender accepted Sh5.5 billion.

UAP and Britam have managed to have their bonds oversubscribed this year. UAP bond attracted bids worth Sh3.19 billion against the Sh2 billion it was seeking while Britam bond managed to get Sh7.4 against Sh6 billion initially planned.

Britam, like CIC Insurance, is investing heavily in real estate.

Britam and its 25 per cent-owned firm Acorn Group are developing property worth Sh40 billion over the next two years.