This will lock out from the market about three quarters of the 2.2 billion shares expected to be listed by introduction on July 19.
Lead transaction adviser Faida Investment Bank said the lock-in period will affect Co-operative Insurance Societies (CIS), which is the main shareholder with a 75 per cent stake in CIC Insurance.
CIS is the umbrella body for the co-operatives that own CIC Insurance, including Co-operative Bank, which is the anchor shareholder with a 25 per cent stake in the insurer.
Senior executives of CIC Insurance will be allowed to sell up to two-thirds of their shares in the first two years.
“The directors and senior management must maintain 35 per cent of their current shareholding for 24 months,” said Bob Karina, chief executive of Faida.
CIC’s annual statement shows that as at March 19 the insurer’s chief executive Nelson Kuria (pictured) had 629,850 shares, CIC Asset Management Limited managing director Peter Mutarura Mwaura had 529,334 shares and CIC Life Assurance managing CIC Life Assurance David Kipruto Ronoh had 343,958 shares,
The lock-in period is expected to give new investors confidence of the management’s commitment to the insurer’s future.
“It demonstrates that the majority shareholders are not listing to rush and exit the company,” said Mr Karina.
The insurer is expected to list by introduction on the NSE at a Sh3.50 introductory price.
Previous listings also had similar lock-in provisions for majority shareholders and directors.
Francis Mwangi, a research analyst at Standard Investment Bank, said that limiting how the large shareholders can sell will boost confidence in new owners. “It gives some comfort that the large shareholders will not have a right to offload all their shares on the first day of trading,” he said. Equity Bank also had a five-year lock in period for directors and senior management.
Longhorn Kenya which listed in early May has a two-year lock in period for majority shareholders and management where majority shareholders can only sell up to 49 per cent of their stake.
