Britam MD Benson Wairegi and the firm’s Chief of staff, Edward Kuria
Britam shareholders have agreed to dilute their stake by 10.37 per cent and bring on board International Finance Corporation in a deal worth Sh3.55 billion.
The deal will see the firm, an investment arm of World Bank, inject Sh3.55 billion in the insurer and buy about 224.2 million ordinary shares at Sh15.85 per share.
Speaking during a General Meeting of the shareholders, Group Managing Director Benson Wairegi said the investment makes IFC a strategic partner in the business. “The investment is a massive show of confidence in Britam and will inject new energy and focus into the business and comes at the right time when the company is implementing its new 2016-2020 strategic plan,” Wairegi said.
The green light from shareholders comes after approval from the Capital Markets Authority and the Insurance Regulatory Authority. The transaction is expected to be formally sealed in the second quarter of 2017 and will become IFC’s largest ever investment in the insurance sector in sub-Saharan Africa.
Once the deal is completed, the issued share capital of Britam will increase by 11.6 per cent, while current shareholding will be diluted by 10.37 per cent. The IFC will also have representation on the Britam Board.
According to the firm’s 2015 annual report, some of the notable figures in top 10 shareholders include Jimnah Mbaru (10.33 per cent), Wairegi (5.18 per cent), Peter Munga (3.87 per cent) and James Mwangi (3.87 per cent). Their shareholding will now be diluted.
According to Wairegi, the new capital will be used to consolidate gains from the group’s recent expansion initiatives, enhance distribution channels and support roll out of new products. In addition, it will help Britam to complete the on-going investment in the company’s new Information and Technology system.
Britam is also upbeat that the deal will raise its profile internationally, and offer support in the areas such as corporate governance, technical skills support and social impact.
“The entrance of IFC gives us confidence that the company is sound and on the right track. Traditionally, IFC only invests in strong companies with good prospects of future growth,” Mr Alois Chami, a shareholder who has stakes in several listed companies, said.
The partnership will give Britam access to strategic, financial and investment advice, and knowledge sharing on strategic planning, business growth, and mergers.
Last year, the insurer unveiled a new strategy that is expected to guide the company until 2020. Priorities in the strategy include trimming the cost of doing business and diversify the products.