Nairobi-based African Trade Insurance (ATI) is raising of $69.1 million (Sh6.9 billion) from five new member countries that will be issued with shares amounting to a combined 18.72 percent stake in the company.
The underwriter has already received Sh1.4 billion and Sh1.7 billion from Nigeria and Ghana respectively. Nigeria acquired a 3.8 percent stake in the transaction while Ghana secured a 4.78 percent equity.
Niger, Togo and Cameroon will each invest Sh1.2 billion in ATI by March 2020 and will each receive a stake of 3.38 percent.
European investment funds are bankrolling the African governments’ purchase of ATI shares.
German development bank KfW, for instance, financed Ghana’s membership and also helped Côte d’Ivoire to increase its stake.
The European Investment Bank (EIB) is set to fund Cameroon, Niger and Togo’s membership.
Besides raising capital from new member states, the insurer also recently sold a 3.5 percent stake to Swiss insurance firm Chubb for Sh1 billion as part of its efforts to strengthen its balance sheet.
“These new shareholdings, combined with a solid performance and steady growth, are expected to bring ATI’s equity to a level exceeding $400 million (Sh40.4 billion) in 2020,” ATI said in a statement.
The entry of new shareholders is set to dilute earlier investors including Kenya which has been the top investor with a stake of 10.36 percent.
The insurer is set to post a $30 million (Sh3 billion) net profit for the year ending this month, based on estimates from management accounts.
This will represent a 150 percent jump compared to net earnings of $11.9 million (Sh1.2 billion) recorded a year earlier.
ATI says it expects to have issued insurance contracts covering risks valued at $6 billion (Sh606 billion) by year-end, up from $4.8 billion (Sh484 billion) the year before.
Its gross written premiums are also projected to rise to $100 million (Sh10.1 billion) from $66 million (Sh6.6 billion).
ATI supports trade and investment in African member states by providing comprehensive hedging solutions, offering covers against political and credit risks.