Acorn lands partner after parting ways with Britam

Corporate News

Acorn’s chief executive Edward Kirathe. PHOTO | FILE  

By DAVID HERBLING, hdavid@ke.nationmedia.com

Britam’s short-lived real estate partner Acorn Group is in talks with an unnamed global private equity fund to buy into the property developer barely a week after the two companies parted ways in an out-of-court deal.

Acorn Group, in which Britam owned a 25 per cent stake, has revealed that the insurance firm has sold its minority shareholding in the company as part of the settlement of the drawn-out multi-billion shilling legal battle.

The property developer said it had also severed ties with Cytonn — founded by former Britam’s asset management executives — who were to act as transaction advisers and fundraiser for Acorn’s projects.

“Britam is no longer a shareholder in Acorn. We are pleased to attract a global player who will be our partners,” Edward Kirathe, Acorn’s chief executive told the Business Daily.

“Cytonn has moved on with its own initiatives,” he added.

Mr Kirathe declined to disclose the identity of the new foreign investor, saying they were now “at the signing stage” and expects to announce the deal by end of this month.

He also did not reveal how much Britam earned from the sale of its minority stake, saying the agreement reached was “confidential.” However, Mr Kirathe said the new investor will get a seat on the board.

READ: Britam abandons claim against Acorn in Sh5bn out-of-court settlement

Britam valued its 25 per cent stake in Acorn Group at Sh299.6 million as at December 2014 —valuing the privately-held property developer at Sh1.19 billion — according to the insurer’s latest annual report.

Cytonn said the disengagement with Acorn will not jeopardise its developments. “Acorn informed us early this year that they could no longer work with us. We promptly accepted that position and proceeded to form our own development arm,” said Edwin Dande, managing partner and CEO of Cytonn Investments.

The abortive tie-up between Britam and Acorn was sealed in November 2013 for an undisclosed amount, as part of a plan to boost the insurer’s presence in the real estate market.

Britam earned Sh8.08 million in the year ended December 2013 as its share of profit from the real estate developer, offering a glimpse into Acorn’s full-year net profit at Sh32.3 million in the period.

The listed insurer did not recognise a share of profit of from Acorn in the year to December 2014, terming it insignificant.

Britam fell out with Acorn in October last year after the property firm ganged up with its exiting asset management executives to snatch real estate projects worth Sh40 billion.

Mr Kirathe teamed up with the former chief executive of Britam’s asset management unit Edwin Dande, Elizabeth Nkukuu (portfolio manager), Shiv Arora (investment analyst) and Patricia Wanjama (head of legal) who had founded Cytonn Investments as a real estate-focused PE fund.