Cash-rich Britam retires Sh6 billion bond

Britam Executive Director Stephen Wandera, Managing Director Benson Wairegi and Finance and Strategy Director Gladys Karuri during the release of the half year results at Britam Centre in Nairobi on August 24, 2018. PHOTO | SALATON NJAU 

By JAMES KARIUKI

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Summary

• The firm borrowed the Sh6 billion in 2014 and was to repay the facility on July 15 next year, shortening the period for paying interest that amounted to Sh780 million annually.
• The repayment comes months after the firm, which has insurance, asset management and property development businesses, received Sh5.7 billion from a private Equity Fund AfricInvest for the sale of new shares.

Britam will save hundreds of millions of shillings in interest payments after it retired early its Sh6 billion corporate bond, reflecting the firms increased cash flow.

The firm borrowed the Sh6 billion in 2014 and was to repay the facility on July 15 next year, shortening the period for paying interest that amounted to Sh780 million annually.

The repayment comes months after the firm, which has insurance, asset management and property development businesses, received Sh5.7 billion from a private Equity Fund AfricInvest for the sale of new shares.

Britam Chief Executive Benson Wairegi said the firm’s board decided to retire the five-year bond, which attracted an interest rate of 13 per cent because the investments made from the cash were generating attractive returns.

“We have a healthy balance sheet and a strong financial position. Investments conducted using the bond’s proceeds are also earning us handsome returns and this informed our decision to redeem the bond issued in June 2014,” he said.

Britam used the funds for expansion in Kenya and the region, property development and investment in private equity, especially at the Nairobi Securities Exchange.

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Britam acquired Sh10 billion land for property investments including office blocks, serviced apartments and malls.

The insurer also operates in Tanzania, Uganda, South Sudan, Rwanda and Mozambique.

“The early redemption of the notes is subject to the consent of noteholders and the timelines for the payment will be announced once this consent has been obtained,” the firm said in a notice.

The firm’s shareholder funds rose 27 per cent to Sh28.6 billion in the six months to June amounting to an extra Sh9.6 billion during the period.

The firm owns shares in NSE companies including Equity Bank and Housing Finance.

Britam wants to go big in the booming property sector and reduce its reliance on the insurance business, which accounts for most of its earnings, and the equities market.