Jubilee Holdings has lent Sh1.7 billion to its associate IPS Cable Systems Limited, with the funds used to buy additional shares in the Seacom submarine fibre optic cable project.
The insurer owns a 33.3 percent stake in IPS, giving it an indirect interest in Seacom.
“During the year, the group advanced a loan to IPS Cable Systems Ltd. In December 2021, funds were transferred to IPS Cable Systems Limited, an associate of the Jubilee Group, toward their financing of additional shareholding in Seacom through IPS Cables Holdings Limited,” Jubilee says in its latest annual report.
“This funding has been envisaged as a debt instrument and the return shall be linked to the economic participation of IPS Cable Systems Limited. As at 31 December 2021, the terms for the financing were yet to be agreed and hence the amount was classified as an advance to related parties.”
After year-end, the Nairobi Securities Exchange-listed firm announced its indirect ownership in Seacom had increased. This indicates that IPS had bought additional shares in the fibre optic firm using the funds from the insurer.
Jubilee announced in early March that its interest in Seacom had jumped to 18.8 percent from the previous 8.8 percent, representing an acquisition of an additional 10 percent equity.
The transaction underlines Jubilee’s preference for investing long-term in private infrastructure projects that can absorb substantial capital while generating stable returns with minimal volatility.
“This additional investment will continue to provide us with stable and consistent returns,” Jubilee’s chairman Nizar Juma said at the time.
Seacom is a Sh75.7 billion, 15,000-kilometre submarine fibre optic cable project. It links South Africa, Mozambique, Madagascar, Kenya and Tanzania with other international broadband cables and seeks to provide low cost and high-quality broadband capacity.
