Britam mints billions for top owners in five days

Britam shareholders have seen the value of their shares jump by Sh9 billion over the past five days on Saturday buyout news of rival Real Insurance that will nearly double its market share.

The firm’s shares stood at Sh15.45 at the close of trading, reflecting an increase of 37.3 per cent and hit its peak since listing at the Nairobi Securities Exchange (NSE) in July 2011 at the price of Sh9 a piece.

This a boon to Britam shareholders including investment banker Jimnah Mbaru, its CEO Benson Wairegi, Equity Bank chief, James Mwangi and Peter Munga, the businessman who chairs Equity Bank board.

The investors along with Dawood Rawat, a foreign national, and Jane Michuki, a managing partner at Kimani & Michuki Advocates each control shares that are worth more a billion shillings in Britam — making them among the top beneficiaries of share price gains at the Nairobi bourse this year.

Britam, which has interests in insurance, real estate and asset management, disclosed over the weekend of plans to purchase 99 per cent in Real Insurance in a cash and share swap deal.

READ: Britam to buy Real Insurance in a share deal

The deal will push its share of Kenya’s insurance premiums to 7.4 per cent from a 4.3 per cent it had in December, placing the firm behind Jubilee (11.3 per cent), CIC (9.1 per cent) and APA (7.8 per cent).

It will also see the principal shareholders of Real Insurance own shares worth hundreds of millions of shillings in Britam — which will also offer them a platform to easily trade in their stocks at the NSE.

But Britam shareholders seem to be the biggest beneficiaries of the buyout news, especially its principal shareholders.

Value of shares rise

Mr Rawat, a Mauritian who chairs Britak’s parent company, has seen the value of his shares rise by Sh1.6 billion in the five days.

Mr Munga, the businessman who together with James Mwangi made his first billion at Equity Bank, is the second largest shareholder with 329.4 million shares has added more than Sh1.1 billion to his holding following the rally.

Mr Mbaru – the principal shareholder at Dyer & Blair Investment Bank— owns 219.3 million shares at Britak is Sh927.6 million richer with Mr Mwangi of Equity Bank adding Sh317 million during the week. Ms Michuki saw her portfolio of Britam shares rise by Sh760 million to Sh2.7 billion.

Britam says the acquisition is informed by its quest to get a larger share of Kenya’s general insurance like car and house and a presence in more African countries.

It has presence in South Sudan and Uganda, but it derives more than 90 per cent of its earnings from Kenya and plans to change this structure in the coming years as the subsidiaries mature. This means that Real Insurance will give it a presence in Tanzania, Malawi and Mozambique.

Real’s general insurance business covers fire, commercial, and motor vehicle risks and had premiums worth Sh2.2 billion last year.

Easy solution

An acquisition provides an easy solution compared to a startup, which could involve buying land, putting up buildings, hiring local staff, seeking regulatory approval and struggling to fight for market share against established rivals.

This the latest buyout to be pursued by Britam, which on November 14 announced a 25 per cent stake in property development firm Acorn as it races to boost its presence in the real estate market.

READ: Britam acquires 25pc stake in property developer

Its ambitions to rump up foreign subsidiaries mirror the rush by local insurers including UAP Insurance, Jubilee Insurance and CIC Insurance to open units outside Kenya.

While Kenya’s insurance market has 45 players, the neighbouring countries have few insurers, attracting more Kenyan firms like Britam.

Britam’s net profit rose 28.7 per cent to Sh2.1 billion in the six months to June, helped by capital gains in its equity portfolio.