Jubilee Holdings sells stake to German firm at Sh10.8bn

Jubilee Holdings Chairman Nizar Juma.

File | Nation Media Group

By  Victor Juma

What you need to know:

• Allianz will acquire controlling stakes of between 51 per cent and 66 per cent in Jubilee’s short-term insurance units in Kenya, Uganda, Tanzania, Burundi and Mauritius.
• Jubilee will receive Sh7.75 billion of the cash proceeds while the rest will be invested in the operating businesses.

Jubilee Holdings is selling majority stakes in its regional general insurance subsidiaries to German conglomerate Allianz SE for a total of Sh10.8 billion, marking one of the largest transactions in the industry in recent years. 

Allianz will acquire controlling stakes of between 51 per cent and 66 per cent in Jubilee’s short-term insurance units in Kenya, Uganda, Tanzania, Burundi and Mauritius.

Jubilee will receive Sh7.75 billion of the cash proceeds while the rest will be invested in the operating businesses.

As part of the transaction, Allianz’s subsidiary in Kenya (Allianz Insurance Company of Kenya Limited) will be merged into Jubilee General Insurance Limited. 

Jubilee will retain significant stakes in the general insurance businesses in the deal expected to be concluded in the first quarter of 2021. The Nairobi bourse-listed firm said the short-term underwriting units represent 12.3 per cent of its aggregate net assets of Sh32.3 billion.

This means that Jubilee’s most valuable business is in life, pension and medical business which it will continue to own separately and are not part of the deal with Allianz.

“We are very pleased with this historic development for Jubilee Insurance,” company’s chairman Nizar Juma said in a statement Tuesday.

“Over the past decade, we have been approached by a number of international insurers looking to partner with Jubilee to expand into East Africa. With Allianz, we have now identified a partner whose strategic aims are aligned to Jubilee’s and whose expertise in the general insurance business is able to enhance the range and depth of products and risk management solutions that we can offer to our customers,” he said.

Mr Juma said the company plans to reinvest the cash generated from the deal in its portfolio of privately-held companies, adding that this will continue its strategy of lessening exposure to the volatile stock market.

The deal is, however, subject to regulatory approvals in the five markets as well as a restructuring of Jubilee’s subsidiaries in Uganda and Tanzania.

He said other decisions, including whether or not the company will pay a special dividend will be made later.

vjuma@ke.nationmedia.com