Private equity firm AfricInvest has spent Sh450 million to acquire an additional 49.3 million shares in insurance group Britam Holdings #ticker:BRIT, raising its stake in the Nairobi Securities Exchange-listed firm to 16.26 per cent.
AfricInvest was first allotted 360.8 million new shares equivalent to a 14.3 per cent stake in May last year at a cost of Sh5.7 billion or a price of Sh15.85 per share. The PE firm subsequently bought more Britam shares in the open market and had acquired a total of 49.3 million units as of October, according to regulatory filings seen by the Business Daily.
“We believe in Britam and its strategy,” George Odo, the senior partner and managing director at AfricInvest East Africa, said. “We had approval to make a larger investment in the company but only managed to invest Sh5.7 billion initially. We were happy to pick up more shares in the market.”
Mr Odo added that the PE firm will not be buying more Britam shares on the NSE.
The extra share purchase came amid a decline in the insurer’s share price, offering AfricInvest an opportunity to increase its stake at a discount to its original investment.
Britam’s stock has dropped 34.7 per cent from Sh13.95 on May 18 last year – when the PE firm was issued with the first batch of shares— to yesterday’s closing price of Sh9.1.
Its market value has, however, recorded a relatively smaller decline of 23.6 per cent to Sh23 billion over the same period as the shares created and allotted to AfricInvest mitigated the paper losses.
The additional 49.3 million shares bought in the market are now valued at Sh450 million and raises the PE firm’s cumulative investment in Britam to Sh6.2 billion.
The insurer’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.
The company expects its net earnings to fall by at least 25 per cent in the year ended December compared to the year before when its net profit stood at Sh527.4 million.