Purchase cements institutional investors’ view that insurer’s growth fundamentals are sound.
AfricInvest was first allotted 360.8 millions new shares equivalent to a 14.3 percent stake in May last year at a cost of Sh5.7 billion or a price of Sh15.85 per share.
The company subsequently bought an additional 49.3 million units of Britam shares worth about Sh450 million in the open market by October last year.
Private Equity (PE) firm AfricInvest has spent another Sh273 million to acquire an extra 32.5 million shares in insurance group Britam #ticker:BRIT whose stock it has been accumulating since last year.
The latest share purchases, disclosed in Britam's latest annual report, have raised the PE firm’s stake in the Nairobi Securities Exchange-listed firm to 17.55 percent.
AfricInvest was first allotted 360.8 millions new shares equivalent to a 14.3 percent stake in May last year at a cost of Sh5.7 billion or a price of Sh15.85 per share.
The company subsequently bought an additional 49.3 million units of Britam shares worth about Sh450 million in the open market by October last year. The extra 32.5 million shares, with a current market value of about Sh273 million, were bought in the three months to December.
AfricInvest's cumulative investment in Britam now stands at over Sh6.4 billion. The firm did not respond to a request for comment but it had earlier told the Business Daily that it has always wanted a larger stake in the insurer.
The share purchases are also seen as an opportunity for the institutional investor to take advantage of Britam's lower share price on the NSE.
The insurer’s current share price of Sh8.4 represents a 47 percent decline compared to AfricInvest's initial entry price.
The recent purchase of 50 million shares by Swiss Re from Britam’s director and founder Jimnah Mbaru — at more than Sh17 per share — is a signal that the market is undervaluing the insurer.
Britam’s debt reduction, regional expansion and investment in technology are seen as some of the factors that make it attractive to investors seeking long-term growth opportunities.
In the short-term, however, Britam’s earnings have taken a major hit from the bear run on the NSE and increased competition in the insurance market.
Britam reported a Sh2.2 billion net loss in the year ended December compared to a net Sh527.4 million profit the year before, with the performance attributed to Sh3.2 billion paper losses on its listed equities investments among other factors.
The company has, in particular, recorded billions of shillings in losses from its purchase of mortgage financier HF Group’s shares.
Most insurance firms took a double hit from the bear market and increased competition in their underwriting business.
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