Companies

Mauritius targets 77pc premium on tycoon’s Britam stake

rawat

Dawood Rawat who is wanted by the Mauritian government for allegedly perpetrating a Sh67.2 billion Ponzi scheme. PHOTO | COURTESY

The Government of Mauritius has set a target to sell the Britam stake previously owned by disgraced billionaire investor Dawood Rawat at a premium of 77.2 per cent over the NSE-listed company’s current price.

The island nation’s Finance minister Seetanah Lutchmeenaraidoo last week announced the plan to sell the 425.5 million shares for $128 million (about Sh13.3 billion) according to a Reuters report.

Mauritius seized Mr Rawat’s assets in early April after accusing him of running a Ponzi scheme through a Mauritian insurer. The preference is to offload the stake to a single buyer, the minister said.

The target price of Sh13.3 billion implies a 77.2 per cent premium on the Sh7.5 billion it could fetch if it were to sell the shares at the current market price of Sh16.6 per share.

Britam’s share price has declined 44.2 per cent since the beginning of the year, reflecting the impact of the general bear run and the investors’ scare over its association with Mr Rawat.

In an address to parliament last week, Mr Lutchmeenaraidoo said the government hoped to secure a single buyer for the whole lot.

“In fact, I can tell the House one thing, if there is a buyer for Britam at 4.5 billion rupees ($128 million), we will sell it immediately,” he said, according to a transcript of the proceedings seen by Reuters.

READ: Ex-Britam director Rawat ‘to sue if Kenyan assets are sold’

The Mauritius government said it wants to sell the tycoon’s assets to compensate investors who lost cash in the alleged Ponzi scheme.

In June, the government-appointed receiver Mushtaq Oosman of PriceWaterhouseCoopers told Reuters the value of the share price was too low to sell.

Britam’s market capitalisation stands at Sh32.1 billion, representing a 53.8 per cent premium on the company’s net assets of Sh20.9 billion.

The target price set by the Mauritius government means it believes it can command an even higher premium.

Jubilee Holdings, Britam’s main rival and the country’s largest insurance group, is currently trading at about double its net asset value of Sh17.2 billion.

Britam posted a 77.2 per cent drop in net profit in the half year ended June, driven by higher costs and a jump in unrealised losses in its investments.

The firm’s net profit stood at Sh625 million in the period compared to Sh2.7 billion a year earlier. Its gross premiums increased 76.5 per cent to Sh10.6 billion, with claims rising 41.9 per cent to Sh5.1 billion.

Commissions rose 80.8 per cent to Sh1.9 billion while operating expenses rose 34.3 per cent to Sh2.4 billion, leading to the reduced earnings.

Mr Rawat has said he would fight to retain his assets including the Britam stake and it remains to be seen whether Mauritius will proceed with the intended sale.