Britam group MD Benson Wairegi (left) and Real Insurance chairman Sam Kamau when they signed an acquisition deal. Photo/FILE
What you need to know:
Britam had planned to initially issue Sh3 billion first bond, with a similar amount in the second offer.
The firm was willing to accept up to Sh1 billion more through the bond’s ‘green shoe’ or surplus option that would have allowed it raise a maximum Sh4 billion.
But with the green shoe option now tripled to Sh3 billion this amount could rise to Sh6 billion especially with the attractive 13 per cent interest.
Britam has raised the maximum amount it can raise through the first phase of its bond issue to Sh6 billion after tripling the amount of excess subscription it is willing to scoop from the market.
The listed financial services firm had planned to initially issue Sh3 billion first bond, with a similar amount in the second offer.
Britam was willing to accept up to Sh1 billion more through the bond’s ‘green shoe’ or surplus option that would have allowed it raise a maximum Sh4 billion. But with the green shoe option now tripled to Sh3 billion this amount could rise to Sh6 billion especially with the attractive 13 per cent interest.
This means it could achieve the full amount including that sought in the second 2015 offer at one go. The amount could be raised by the end of today when the offer closes.
“The issuer proposes to amend the green shoe from Sh1 billion to Sh3 billion,” said Britam in a statement.
The second tranche will only take place if Britam is not able to raise the entire amount through the ongoing offer.
Britam is issuing the bond to expand locally, regionally and further develop its property and private equity businesses.
Analysts said raising the borrowing target through the first offer indicates the issuer is not only confident of raising the entire amount but also that there are more deals in the pipeline.
“I believe they are planning or targeting more buyouts. Britam’s ambition is to become a pan-African diversified financial services group. To achieve this they will have to look beyond East Africa,” said Geoffrey Maina, a research analyst at Old Mutual.
Mr Maina says financing the ambition will need more cash than what it has at the moment.
Nigeria and Mozambique are the new markets that Britam has set its sights on after buying a 30 per cent stake in Real Insurance and Continental Re respectively.
The purchase of Real is particularly expected to dramatically increase revenues from premiums.
“We project a 30 per cent increase in consolidated premium generation based on the integration of Real’s current operations,” said an insurance industry report by Genghis Capital.
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