Businessman Peter Munga is set to sell 348.5 million shares of financial services firm Britam
worth Sh4.8 billion to Zurich-based insurance giant Swiss Re,
completing his disposal of the 452.5 million shares he acquired from
former owner Dawood Rawat in 2016.
Mr Munga first sold
104 million shares worth Sh1.4 billion in the open market last year as
he raced to meet his self-imposed deadline of selling the stocks by
August this year.
Britam made public the latest shares
transaction in a notice sent to the Nairobi Securities Exchange in line
with the market regulations.
“Britam Holdings Plc
(Britam) has been informed by one of its key shareholders, Plum LLP
(Plum) that Plum has on June 11, 2018 entered into a Share Purchase
Agreement (the SPA) with Swiss Re Asset Management Geneva S.A., Carouge
(Swiss Re), pursuant to which Swiss Re will purchase three hundred and
forty eight million, five hundred and four thousand (348,504,000)
ordinary shares (the Shares) in Britam from Plum (the Proposed Sale),”
Britam said.
Upon completion of the proposed sale, Swiss Re will hold
approximately 13.81 per cent of the issued ordinary shares of Britam.
The latest transaction places the total value of the share sales at more
than Sh6.2 billion.
Mr Munga has neither disclosed
the price at which he acquired the shares nor the price at which he is
selling, making it difficult to determine the benefits accruing to him
from the transactions.
The billionaire businessman, who
still retains a significant stake in Britam of more than 10 per cent
through various investment vehicles, has been holding the Rawat shares
under his company Plum LLP.
Swiss Re said it is
investing in Britam for the long term, making it the latest in a string
of high-profile institutional investors that have bought into the local
insurer over the past two years.
Britam has raised
Sh9.2 billion by issuing new stock to International Finance Corporation
(IFC) and private equity firm AfricInvest. Mr Munga bought the 452.5
million shares from the government of Mauritius, which seized and sold
several of Mr Rawat’s assets.
Mr Rawat, a Mauritian
national, was accused by his government of running a $693 million
(Sh69.3 billion) Ponzi scheme in the island nation. Mr Munga earlier
said he would hold the shares temporarily, adding that the transaction
was motivated by the desire to eliminate investor uncertainty brought by
Mr Rawat’s troubles at the time.
“It is not our
intention to hold the acquisition shares for the long term,” Mr Munga
said through Plum LLP when the deal was announced in July 2016.
Britam top owners (Dec 2017)
Equity Holdings | 18.7 |
Plum LLP | 16.1 |
Stanchart A/c 11396 | 10.7 |
IFC | 10.4 |
Jimnah Mbaru | 9.0 |
Benson Wairegi | 4.6 |
Peter Munga | 3.5 |
James Mwangi | 3.5 |
Co-op A/c 4012 | 2.8 |
Filimbi | 2.7 |
*Recent entry of AfricInvest further diluted old shareholders
“The purpose of the proposed acquisition of the shares is to
allow Britam and its shareholders the time they require to identify a
suitable investor.”
Mr Munga was not available for comment.
Britam’s
founders, including Mr Munga, have reduced their stakes in the company
since it went public in 2011, earning hundreds of millions of shillings
from the disposals.
The company’s top shareholders’ list has been dominated by local billionaire investors such Jimnah Mbaru, Equity Bank’s
CEO James Mwangi and the insurer’s chief executive, Benson Wairegi.
IFC,
which has acquired an 8.8 per cent stake in Britam, has asked the
company’s founders to maintain a combined stake of at least 20 per cent
up to October 2019, a move seen as demonstrating the founders’
commitment to the company.
AfricInvest was recently
allotted a 14.3 per cent stake in Britam, with the entry of the two
institutional investors diluting the equity of the founders.
IFC earlier said it could gatecrash into Mr Munga’s exit trades if the businessman gets good buyout offers.
“If
any key shareholder wishes to transfer his shares in the company to an
investor under the terms of an approved private transaction, or to a
strategic investor through any means, IFC shall have the right to tag
along on such a transfer on the same financial terms as shall apply to
the key shareholder,” Britam said in a circular detailing the
institution’s investment plans.
The investment from IFC
and AfricInvest is a signal of their confidence in Britam’s future
prospects, with the new capital to be spent on increased digitisation,
development of new products and investment in regional operations.
“Britam’s
regional operations, experienced management team, the entrepreneurial
spirit of the key shareholders, and the company’s belief in good
governance were all elements that attracted us to Britam. These are the
ingredients that we typically look for as investors,” AfricInvest East
Africa senior partner George Odo said in an earlier statement.
Britam share price (Sh)
This is AfricInvest’s second major investment in a local insurer
after UAP Holdings where it was bought out at a large profit as part of
the insurer’s takeover by financial services giant Old Mutual.
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