Pan Africa shares rise on news of acquisition plan
Nairobi Securities Exchange. Pan Africa Insurance shares have risen to a 10-month high of Sh34.30. Photo/File
Pan Africa Insurance shares have risen to a 10-month high of Sh34.30 following announcement by its majority shareholder of an intention to accumulate more of the company’s stock through purchase in the open market.
The counter traded 10,300 shares on Thursday rising 3.9 per cent from previous day’s trading price.
Eric Munywoki, an analyst with Dyer and Blair Investment Bank, said the sustained demand for the stock was “pushing the share price up.”
Last week, South Africa-based Sanlam Limited issued a statement that it had received approval from shareholders and market authorities to increase its shareholding in the company to 60 per cent from the current 50 per cent.
The company, which is targeting a controlling stake to give it a free hand in re-organising the Kenyan insurer, stated that it would buy shares as offered in the securities market.
“The terms of the proposed offer are that the offer or will acquire, at its sole discretion, an unspecified amount of ordinary shares of a par value of Sh5 each in the proposed offeree (subject to the above maximum amount) by purchasing such shares from willing sellers on the Nairobi Securities Exchange (NSE)... ,” said Hubris Holding, the parent company of Sanlam Limited in a statement.
To raise the desired 10 per cent extra stake, Sanlam will be aiming to buy 9.6 million shares in the market. The company, however, sought and received exemption from the Capital Markets Authority from take-over regulations.
Kenya’s insurance law does not allow a foreign investor to own more than two thirds or 66 per cent of an insurer.
Stock prices at the NSE have risen by an average of 13.9 per cent over the first five months of this year with Pan Africa shares price rising 65 per cent in six months.
Pan Africa net earnings dropped 24.7 per cent last year to Sh443 million. Kenya’s insurance sector has been busy with capital transactions with UAP Insurance Group raising Sh4.7 billion last week from the sale of shares to three private equity funds to finance its expansion even as it eyes listing on the NSE in two years.
Aureos contributed Sh1.7 billion, Africinvest (Sh2.1 billion) and Swedfund Sh845 million in a deal that values the regional insurer at Sh11.75 billion.
Other deals in the last year include the exit of Pan Africa Insurance from APA Insurance.
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