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
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.