Fund seeks to ‘lock-in’ Britam top own­ers

Top in­vestor in­clud­ing bil­lion­aires Peter Munga, James Mwangi and Jim­nah Mabaru may be re­quired to hold on to shares for two years

Daily Nation (Kenya) - - BUSINESS - BY NEVILLE OTUKI no­tuki@ke.na­tion­media.com

Africin­vest bought a 14.3 stake worth Sh5.7 bil­lion in the in­surer with op­er­a­tions in six African coun­tries

Pri­vate Equity (PE) Fund Africin­vest is seek­ing to re­strict Britam’s top own­ers from sell­ing their stake in the in­sur­ance firm for a pe­riod of two years af­ter it ac­quired a 14.3 per cent share­hold­ing.

Britam on Fri­day told in­vestors that it is in talks with the PE fund over a new pact that com­pels top share­hold­ers to re­tain the stake, which is equiv­a­lent to 360.8 mil­lion shares.

Top in­vestors in­clud­ing busi­ness­man Peter Munga, Britam CEO Ben­son Wairegi, Equity Bank CEO James Mwangi and in­vest­ment banker Jim­nah Mbaru will have a com­bined stake of 41.3 per cent once the Africin­vest deal is con­cluded.

The In­ter­na­tional Fi­nance Cor­po­ra­tion (IFC), World Bank’s pri­vate lend­ing arm, be­came a ma­jor share­holder in Britam af­ter it bought a 10.37 per cent stake in March.

“Cer­tain Key Share­hold­ers will main­tain own­er­ship, di­rectly or in­di­rectly, of an ag­gre­gate of 362,437,828 or­di­nary shares, in the pro­por­tions that will be set out in the Share Re­ten­tion Deed for a pe­riod of two years,” the Nairobi bourse-listed in­surer said in a cir­cu­lar to its share­hold­ers who ap­proved the Africin­vest deal yes­ter­day.

The cir­cu­lar did not spec­ify who the cer­tain key share­hold­ers are. The two-year “lock up” pe­riod means that Britam own­ers will not exit the busi­ness be­fore De­cem­ber 2020. Strate­gic in­vestors in­sist on the share lock-in clause when buying into com­pa­nies to pre­vent key hold­ers ex­it­ing or flood­ing the mar­ket as soon as the pur­chase deal is con­cluded.

The IFC in March re­quired top Britam own­ers to re­tain a com­bined stake of 20 per cent in the firm af­ter it bought a Sh3.5 bil­lion stake. The Africin­vest deal has now ex­tended the re­stric­tion by at least nine month given the IFC limit was to end around March 2019.

Africin­vest is also seek­ing top Britam own­ers to sup­port its ap­point­ment to the in­surer board so long as its min­i­mum own­er­ship stands at 8.88 per cent.

Britam said the Sh5.7 bil­lion paid by Africin­vest will be used in clos­ing prop­erty deals, fresh in­vest­ment in its sub­sidiaries and re­vamp­ing its tech­nol­ogy to al­low it to de­liver its prod­uct via dig­i­tal chan­nels like mo­bile phones.

Britam, which has in­sur­ance, as­set man­age­ment and prop­erty de­vel­op­ment businesses, has ac­quired land worth Sh10 bil­lion for its prop­erty in­vest­ments in­clud­ing of­fice block, ser­viced apart­ments and malls. It has op­er­a­tions in six other African coun­tries in­clud­ing Tan­za­nia, Uganda, South Su­dan, Rwanda and Mozam­bique.

“The Group will in­vest part of the pro­ceeds from the sub­scrip­tion to in­crease cap­i­tal in its sub­sidiaries to… take ad­van­tage of growth op­por­tu­ni­ties in their re­spec­tive mar­kets,” said the cir­cu­lar.

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