Gateway investors to earn Sh600m from sale of stake
Brokers on the trading floor of the Nairobi Securities Exchange. Gateway Insurance's 20 shareholders are set to pocket more than Sh600 million on conclusion of the proposed sale of a majority stake to NSE-listed Pan Africa. PHOTO | SALATON NJAU |
What you need to know:
Pan Africa will first acquire a 51 per cent stake in Gateway at a cost of Sh561 million, buying a total of 31.9 million shares at a price of Sh17.56 apiece from an unidentified group of the company’s shareholders.
This will be followed by the purchase of additional shares from the Karuri family at the same price per share. The Karuri family controls a combined stake of 53.7 per cent in Gateway, part of which has already been committed to Pan Africa in the initial buyout.
Gateway Insurance shareholders are set to pocket more than Sh600 million on conclusion of the proposed sale of a majority stake of the business to Pan Africa Holdings.
The Nairobi Securities Exchange-listed Pan Africa currently offers life insurance covers, and intends to enter the general underwriting business through the Gateway acquisition.
Gateway has a total of 20 shareholders, including the family of the founder and majority owner the late Godfrey Wairegi Karuri and the estate of the late politician John Michuki which owns a one per cent stake valued at Sh10.9 million.
The transaction, to be funded through internal cash reserves, will be divided into two phases.
Pan Africa will first acquire a 51 per cent stake in Gateway at a cost of Sh561 million, buying a total of 31.9 million shares at a price of Sh17.56 apiece from an unidentified group of the company’s shareholders.
This will be followed by the purchase of additional shares from the Karuri family at the same price per share. The Karuri family controls a combined stake of 53.7 per cent in Gateway, part of which has already been committed to Pan Africa in the initial buyout.
Ownership rules
It was not immediately clear what total stake Pan Africa will buy from the Karuris and other investors, with the NSE-listed firm saying its goal is to help the family comply with insurance ownership rules which caps their interest at 25 per cent.
“The company has… undertaken to subscribe for new ordinary shares in Gateway such that the percentage shareholding of the Karuris decreases to 24.9 per cent,” states a shareholder circular detailing the acquisition. This implies that Pan Africa’s interest in Gateway could rise from the initial 51 per cent, which would see the firm’s acquisition cost exceed Sh600 million.
The Karuri family, whose patriarch co-founded Gateway in 1982, will remain minority shareholders in the company with a right to appoint two directors.
Pan Africa will appoint three directors to the seven-member board that will also have two independent directors.
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