Britam founders cede control in Mbaru deal

Investor Jimnah Mbaru
Investor Jimnah Mbaru. FILE PHOTO | NMG  

Businessman Jimnah Mbaru has sold 50 million Britam Holdings shares valued at Sh425 million to Zurich-based insurance giant, Swiss Re, in a transaction that has seen founders of the Nairobi Securities Exchange-listed firm cede control to foreign institutional investors.

Swiss Re, International Finance Corporation (IFC) and private equity firm Africinvest now hold a combined 40.79 percent stake in Britam compared to the 39.2 percent equity held by the founders, including Mr Mbaru, Peter Munga, Benson Wairegi and James Mwangi.

The deal marks increased foreign investor interest in the insurer, with Swiss Re adding to its last year’s initial purchase of 348.5 million shares from Mr Munga.

The multinational, which now has a 15.79 percent stake in Britam, did not disclose the price it paid in the deals with Mr Munga and Mr Mbaru.

Africinvest’s stake of 16.2 percent emerged from a combination of being issued with new shares and buying additional stock on the NSE.


IFC was also issued with new shares, resulting in its 8.8 percent equity.

The transactions have been motived by a need to raise new capital to fund the company’s growth and the founders’ desire to take profits and diversify their personal portfolios.

Increased purchase of the insurer’s shares by the institutional investors signals their confidence in Britam’s long-term future prospects despite its recent weaker earnings and share price rout.

The company’s market capitalisation has dropped 62.8 percent from its peak of Sh57.6 billion in February 2015 to the current Sh21.4 billion, with the share price receding to the present level of Sh8.5.

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.