Pan Africa Life Insurance chairman John Simba (left) with Sanlam
Development Market CEO John Van Zyl (right) and Housing Finance MD Frank
Ireri during a cocktail in honour of Mr Van Zyl in Nairobi in 2010.
Photo/File
By VICTOR JUMA
Posted Tuesday, March 5 2013 at 19:57
Posted Tuesday, March 5 2013 at 19:57
In Summary
- Sanlam plans to raise its stake in the insurer to 60 per cent from the 50 per cent it held in December 2011.
- The South African firm said the share acquisition is aimed at gaining control of the insurer’s strategic direction.
South African firm Sanlam Holdings has invested over Sh200 million to acquire a 5.6 per cent stake in Pan Africa Insurance Holdings over the past one year.
Sanlam plans to raise its stake in the insurer to 60 per cent from the 50 per cent it held in December 2011, with the share purchases helping small investors to exit at a premium.
The South African firm said the share acquisition is aimed at gaining control of the insurer’s strategic direction.
Pan Africa’s shares have more than doubled in value over the past 12 months to trade at Sh49.5 as Sanlam’s purchases drive up demand amid declining liquidity of the stock.
Regulatory disclosures to the Capital Markets Authority show that Sanlam’s local subsidiary, Hubris, has raised its stake in Pan Africa to 55.6 per cent in January from 50 per cent in December 2011.
The bulk of the shares were bought in the second half of last year when the stock traded between Sh35 and Sh41, placing its average price at Sh37.
Hubris’ absolute holdings of Pan Africa shares increased from 48 million to 53.4 million, with the firm paying more than Sh200 million to acquire the additional shares at the Nairobi Securities Exchange.
Analysts say Pan Africa’s stock is gaining from its good performance and Sanlam’s share purchases are set to further reduce liquidity of the stock.
“Both Sanlam and small investors are in the market seeking to buy shares in the company for control and dividend respectively,” said Vimal Parmar, head of research at Burbidge Capital.
“Investors are willing to pay a premium for the stock to gain from its recent good performance,” he said, adding that the rising demand had provided an opportunity for older investors to exit at a profit.
Among the institutional investors that have exited or reduced their shareholding in the company are Kacher Kenya Limited and Thammo Holdings.
Kacher, which held 5.2 million shares in Pan Africa in December 2011, has now disappeared from the company’s list of top shareholders. Thammo’s shareholding dropped from 1.3 million to 457,900 in the same period.
The institutions are selling to Sanlam and local individual investors whose purchases have been linked to Pan Africa’s strong performance in the half year ended June 2012.
The insurer’s net profit trebled to Sh218.3 million in the period compared to Sh73 million a year earlier as gross written premiums surged 75.7 per cent to Sh3.2 billion.
Its investment income rose six times to Sh1.1 billion from
Sh157.2 million, driven by higher valuations of its investment portfolio
including equities.
Analysts at NIC Securities say Pan Africa’s performance will in the short term also benefit from its sales of properties in Runda Estate.
The rush for its shares is set to further reduce its liquidity, making it difficult for investors to exit and extending the share price rally.
The firm’s shares available for trading — excluding Sanlam Holdings — have dropped from 48 million to 42.5 million.
Once the South African firm completes its full acquisition of the 10 per cent stake or 9.5 million shares, the tradable stocks will stand at 42.6 million.
Its 60 per cent stake will be six percentage points below the maximum shareholding of 66 per cent allowed to a foreign investor in a local insurer under Kenyan laws.
The company said the bigger stake would give it enough voting rights to make material changes, a pointer to a shake-up of the Pan Africa Insurance board and a review of its business operations.
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