CIC Insurance Group #ticker:CIC will subdivide its 200-acre land in Kiambu County into plots and sell the parcels to many different buyers after it was unable to dispose of the property in a single transaction.
The new selling strategy, in which the smallest plot will be a quarter of an acre, is expected to take longer but raise more money compared to dealing with one buyer who drives a hard bargain.
“We wanted to sell the 200 acres to one buyer but that has been a challenge. We will now subdivide the land into plots and sell them to individuals and corporate buyers,” CIC’s chief executive Patrick Nyaga told Business Daily.
“This will raise more money than the initial plan to dispose of the land in one transaction.”
The land, located next to Tatu City, was valued at Sh3.8 billion in December 2020. Dividing it into pieces and selling to different buyers is likely to fetch a higher price, assuming the whole land is ultimately sold.
A quarter-acre plot in the area is going for Sh7.5 million, implying that the insurer could raise up to Sh6 billion from the new selling strategy.
“The minimum land size is a quarter of an acre but larger parcels will also be available,” Mr Nyaga said, adding that the sale of the plots will start in May.
“We have developed a mixed-use project plan and buyers will be fitting into that. We expect the sale of the plots to take up to two years.”
The insurer applied for a change of use plan for the land and other approvals from the National Environment Management Authority (NEMA) ahead of the land subdivision.
CIC has been planning to sell the land in a bid to reduce its borrowings and boost returns, noting that the idle property has not been generating cash from lack of development.
The insurer’s major liability is a loan from Co-op Bank #ticker:COOP . Its borrowings, including the credit facility from the bank, stood at Sh4.3 billion as of December.
CIC made a Sh668.4 million net profit in the year ended December, reversing the net loss of Sh296.8 million the year before.
The return to profitability was aided by improved performance across insurance and investment operations besides positive currency movements.