Companies

Britam acquires 21-acre Ngong land to develop residential estate

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Britam on Friday announced a 5.5 per cent growth in after-tax profit to Sh2.65 billion. FILE

Financial services group Britam has acquired 21 acres of land in Ngong for construction of residential houses, deepening the company’s foray into real estate.

Britam, which on Friday announced a 5.5 per cent growth in after-tax profit to Sh2.65 billion, aims to raise its property investments to a fifth of its total assets from the current level of eight per cent.

The Ngong acquisition comes after last year’s purchase of 10 acres of land in Mlolongo on which Britam intends to build a shopping mall and hotel.

“We expect to close the deal for the 21 acres of land in Ngong by the end of this month,” said Britam CEO Benson Wairegi on Friday.

The land was acquired for Sh321 million.

“Ngong is a fast-growing area and that is why we are looking at putting up a residential development there. The plan is still in the early stages and therefore I cannot comment on how much we will use in to develop the project,” he added.

Britam has interests in insurance, assent management and real estate. It is set to announce at least seven more real estate projects by May, all of them in and around Nairobi, according to Mr Wairegi.

Britam’s investment in property as of December 2013 stood at Sh8 billion out of its total asset portfolio of Sh46.8 billion.

The firm says it wants grow this to between 20 and 30 per cent in two years and cut reliance on equities which stand at Sh13.7 billion or 29 per cent of its assets. This quest is being spearheaded by property development firm Acorn Group in which Britam acquired a 25 per cent stake last year.

The Mlolongo land bought in December cost the group Sh350 million.

Britam is also building a Sh4.2 billion, 30-storey office tower and car park in Upper Hill.

“Development of the building is ongoing and we expect that until its completion in 2016, a lot of cash from our operations will be going into it,” said Gladys Karuri, Britam’s finance director.

Britam’s investment income for the year to December 2013 increased 0.26 per cent to Sh6.3 billion, compared to the previous year’s Sh5 billion.

The firm’s total income grew to Sh15 billion from Sh11.7 billion recorded in 2012. The company’s insurance business also contributed positively to its earnings, returning a pre-tax profit of Sh2.5 billion, Sh1 billion above the previous year’s return.

Britam, which now has presence in four countries after setting up in Rwanda late last year, says its South Sudan business posted Sh114 million in revenues last year, in its first full-year of operations.

Britam began operation in South Sudan in November 2012 and by the close of that year, had contributed only Sh1 million in revenue.

The group is in the final stages of completing the purchase of rival firm Real Insurance in a deal involving cash payment of Sh825 million and issuance of new shares worth Sh550 million to Real Insurance shareholders.

“We expect that transactions to acquire Real Insurance will be complete by April and that it will fully consolidate into our business by June,” Mr Wairegi said of the firm with operations in Tanzania, Malawi and Mozambique.

By declaring a dividend of 25 cents per share, Britam said it would be paying out a total of Sh473 million to its shareholders.

This amount is similar to what it paid in 2012 despite its improved earnings this year.