Insurance group Britam is set to raise Sh5.7 billion from private equity firm Africinvest which is acquiring a 14.3 per cent stake in the Nairobi Securities Exchange-listed firm.
The Tunis-based multinational will buy 360.8 million Britam shares at Sh15.85 each, matching the price at which the International Finance Corporation (IFC) recently acquired 224.2 million shares or a 10.37 per cent stake in the insurer for Sh3.5 billion.
Africinvest’s entry brings Britam’s total fundraising to Sh9.2 billion, indicating an aggressive expansion plan.
“Upon completion of the subscription, the investor (Africinvest) will hold approximately 14.3 per cent of the issued ordinary shares of the company,” Britam said in a statement.
“The subscription is subject to conditions that are customary to transactions of this nature, including shareholders’ and regulatory approvals.”
The price per share of Sh15.85 to be paid by Africinvest represents a 5.7 per cent premium on the market price of Sh14.95 in Tuesday’s trading.
When the IFC deal was announced in late December 2016, the price represented a 58.5 per cent markup on the stock which traded at Sh10 at the time.
The entry of Africinvest has nearly exhausted Britam’s ability to raise additional funds from selling shares in the short term.
IFC’s investment came with conditions that capped the amount the insurer could raise from issuing new shares to another investor at $60 million (Sh6.1 billion).
The international financier also barred Britam from selling new shares at a price lower than its subscription price of Sh15.85, a condition complied with in the Africinvest deal.
Britam’s key local shareholders — Peter Munga, Jimnah Mbaru, Benson Wairegi and James Mwangi — also committed to maintain a combined ownership of at least 20 per cent for two years after the IFC investment.
The investors, whose aggregate interest currently stands at 57.24 per cent, will see the lockup tighten after their dilution by Africinvest which will reduce their stake to 49.05 per cent.