Wanjui meets 25pc threshold after UAP’s public share offer

The sale of 45.7 per cent stake in UAP Insurance Group will help businessman Joe Wanjui comply with the law that limits the ownership of individual investors in insurance companies to 25 per cent.

Also read: UAP Holdings launches Sh750m share sale

Dr Wanjui, who is also the chairman of the UAP Group, was the top shareholder in UAP Group with a 35.8 per cent stake, which was above the required limit that was set in 2009 to enhance corporate governance in insurance companies.
But the conversion of a Sh4.7 billion debt into equity by private equity (PE) funds Aureos Africa Fund, AfricInvest Fund and Swedfund International AB, together with the sale of 12.5 million shares to the public will reduce his shareholding to 20.3 per cent.
The shares by the PE funds will be converted at a price of Sh57.68 a share while the public offer is based on Sh60 a piece, valuing Dr Wanjui’s stake at Sh2.58 billion.
Insurers were given three years from 2009 to comply with the shareholder rule, but companies had the window to seek for a two-year extension through the Finance minister.
The share sale will also dilute the holding of key shareholders that includes Centum Investment whose 24.2 per cent stake will drop to 13.8 per cent, Chris Kirubi (16.9 per cent to 9.6 per cent) and the insurer’s group managing director James Muguiyi (10.5 per cent to six per cent).
“After the PE transactions, none of the shareholders in UAP will have a majority shareholding or have any special voting rights,” says UAP in the prospectus guiding the public offer that was launched yesterday.
 UAP Insurance Group raised Sh4.7 billion from the sale of shares to three PE funds to finance its expansion as it eyes listing on the Nairobi Securities Exchange in the next 12 to 18 months.
Aureos contributed $20 million (Sh1.7 billion) between March and June at rate of five per cent per year, Africinvest €19 million (Sh2.1 billion) and Swedfund $10 million (Sh845 million), in a deal that values the regional insurer at Sh12.69 billion.

“The loan is stated to be convertible into ordinary shares immediately prior to the company making a public offer,” says the prospectus.
Aureos will acquire a 13.6 per cent stake, Africinvest 16.7 per cent and Swedfund will acquire seven per cent.

The funds will help UAP spread its reach across Africa and deepen its activities in the region’s thriving property market, diversifying its portfolio away from the equities market.

UAP’s investment options are limited to real estate in a region whose financial markets are still under-developed. It owns Telkom Plaza, Union House, and Equity Centre.
UAP intends to enter into two new markets —Tanzania, and the Democratic Republic of Congo before the end of the year. This will increase its presence in East Africa following its entry into South Sudan in 2006 , Uganda in 2004 and this year in Rwanda.
See related story: UAP targets wealthy investors in share sale