CIC Insurance seeks Sh3 billion for real estate projects

CIC Insurance is seeking to raise Sh3 billion in the next two years to fund real estate projects and for regional expansion.

Chief executive Nelson Kuria said the capital injection would be through a mix of options including a corporate bond and a rights issue.

The company’s real estate ventures include a high-end residential estate to be constructed on a 200-acre land in Kiambu and a middle-class residential development in Isinya where it has acquired 400 acres.

The new capital will also be used to set up operations in Tanzania.

“We will use all kinds of appropriate approaches including debt and rights issue,” said Mr Kuria.

The announcement of a potential rights issue comes as the company’s stock has gained 68 per cent over the past six months to trade at Sh7.6 at the Nairobi Securities Exchange.

Mr Kuria said CIC has adequate internal cash generation to fund the Sh1.2 billion regional expansion plans.

READ: CIC to build high-end estate near Tatu City

The company on Tuesday signed a joint venture deal with Malawi Union of Savings and Credit Co-operatives (Muscco) to start an insurance firm in Malawi.

CIC and Muscco hold a 49 per cent stake each in the operation with an unnamed third institutional investor set to take the remaining two per cent equity. CIC’s capital contribution stands at Sh300 million, with the Malawian insurer set to open its doors from July.

The company is eyeing joint ventures with local investors to launch operations in Uganda and South Sudan.

It has allocated Sh500 million for the South Sudan venture where it will take a 69 per cent stake while Co-operative Bank’s subsidiary in that market takes the remaining 31 per cent.

CIC will invest Sh300 million to acquire a 51 per cent stake in a new subsidiary in Uganda with the remaining 49 per cent equity to be held by Uganda Cooperative Savings and Credit Union Limited.

Mr Kuria said the company has stepped up its regional expansion to grow its earnings and diversify from the Kenyan market. All the countries CIC is targeting have a low insurance uptake, close to that of Kenya standing at less than five per cent.

In Malawi, CIC will introduce life and general insurance covers and will develop micro-insurance products to grow its customer base among low-income households.

Besides the expansion of insurance operations, CIC is keen on expanding its presence in Kenya’s booming property market where demand for commercial and residential units has registered strong growth.

CIC’s net profit grew 1.4 per cent to Sh1.4 billion in the year ended December, weighed down by lower investment income and higher claims.