Insurance group Britam #ticker:BRIT has sold 30.1 million shares of Equity Group #ticker:EQTY worth nearly Sh1 billion, cutting its interest in the lender to a new low of 8.2 per cent.
Britam’s corporate affairs director Muthoga Ngera told Business Daily the insurer now holds an 8.2 per cent stake in Equity compared to nine per cent in December 2015. The share sales are the latest move by the Nairobi Securities Exchange-listed firm to reduce its concentration in the lender which in 2014 accounted for 26 per cent of its total assets.
“This is part of our normal portfolio balancing,” Mr Ngera said, noting that Britam holds its investments in Equity directly and through its various insurance subsidiaries.
The insurer previously held a 10.1 per cent stake in Equity and has steadily sold the lender’s shares that it first acquired in 2004.
The lender’s long-term stock price rally saw it rise to dominate Britam’s assets mix, with the share sales bringing the stake closer to the maximum threshold proposed by the Insurance Regulatory Authority (IRA). The regulator in 2015 published draft investment guidelines that capped some insurer’s investment in a single company at five per cent and in a bank at 10 per cent.
“An insurer transacting long term business shall not invest more than five per cent of the total assets of the insurer in any company, commodity or group of related companies,” reads part of the guidelines.
“Where the company or group of related companies is a bank or financial institution, the maximum limit for the investment shall be 10 per cent.”
With a market value of Sh10 billion, the Equity shares represent about 12 per cent of Britam’s total assets of Sh83.6 billion as of December 2016.
The insurer’s other major investment at the Nairobi bourse is mortgage financier HF Group #ticker:HFCK in which it holds a 48.8 per cent stake.