Ju­bilee wants a big­ger slice of Bu­ja­gali

Com­pany cur­rently owns a 25 per cent stake, and is await­ing ap­proval for ad­di­tional shares

The East African - - FRONT PAGE - By JAMES ANYANZWA The Eastafrican

Re­gional insu≥e≥ plans to in­ject an ad­di­tional $44m into the Ugan­dan hyd≥oelect≥ic plant.

Re­gional in­surer Ju­bilee Hold­ings Ltd plans to in­ject an ad­di­tional $44 mil­lion into the Bu­ja­gali hy­dro­elec­tric power plant for an es­ti­mated eight per cent stake, bring­ing the in­surer’s share­hold­ing in the Ugan­dan power plant to around 34 per cent.

Ju­bilee, which cur­rently owns a 25 per cent stake in Bu­ja­gali, said it is di­ver­si­fy­ing its in­vest­ments in the re­gion by tar­get­ing projects that guar­an­tee high re­turns.

“That is our of­fer, but the share­hold­ing will be de­cided by the board of Bu­ja­gali,” the in­surer’s re­gional chief ex­ec­u­tive Julius Kip­ngetich told The Eastafrican on Fri­day. “Once the board for­mally ac­cepts our of­fer, it will pro­ceed to re­al­lo­cate the shares.”

The firm’s stock on the Nairobi Se­cu­ri­ties Ex­change remained steady at Ksh520 ($5.2) per share through Thurs­day this past week.

The plan comes barely two years af­ter the in­surer, which is listed on the NSE and crosslisted on the Uganda Se­cu­ri­ties Ex­change and the Dar es Salaam Stock Ex­change, bought an ad­di­tional 8.8 per cent stake in the power plant at a cost of $55 mil­lion.

The shares were sold by Sithe Global Power Llc, one of the founder share­hold­ers of Bu­ja­gali, which was ex­it­ing the project.

Last week, Ju­bilee chair­man Nizar Juma said the move to in­crease the com­pany’s in­vest­ment in the power plant was in­formed by the firm’s re­gional di­ver­si­fi­ca­tion strat­egy.

“We con­tinue to search for high qual­ity con­ser­va­tive in­vest­ments that of­fer con­sis­tent and com­pet­i­tive re­turns and also pro­vide a suit­able as­set-li­a­bil- ity match for some of our longer term in­sur­ance li­a­bil­i­ties,” said Mr Juma.

Ju­bilee’s other in­vest­ments in­clude Tsavo Power, Farm­ers Choice Ltd, In­dus­trial Pro­mo­tion Ser­vices (IPS) and the Ser­ena Group of Ho­tels. The in­surer is also in­vest­ing in tech­nol­ogy and data an­a­lyt­ics.

In 2017, Ju­bilee Hold­ings made a net profit of $42.3 mil­lion, rep­re­sent­ing a 15 per cent rise from the $36.7 mil­lion recorded the pre­vi­ous year.

Its total in­come grew 25 per cent, to $312.7 mil­lion, from $249.7 mil­lion. Net in­sur­ance pre­mium rev­enue in­creased nine per cent to $191.9 mil­lion, from $175.8 mil­lion in the same pe­riod.

Earn­ings per share went up 19 per cent to Ksh54.26 ($0.54) from Ksh45.49 ($0.45), and share­hold­ers ap­proved the pay­ment of a total div­i­dend of Ksh9 per share ($0.09) for 2017.

Ac­cord­ing to con­sul­tancy firm KPMG, the in­sur­ance sec­tor in East Africa has huge po­ten­tial and op­por­tu­ni­ties for growth, but the re­gion has low lev­els of in­sur­ance pen­e­tra­tion partly due to lack of dis­tri­bu­tion chan­nels for the ru­ral pop­u­la­tion and poor in­no­va­tion in new prod­ucts. Pen­e­tra­tion in the re­gion has stag­nated at an av­er­age of be­low two per cent for decades.

Other bar­ri­ers in­clude low lev­els of aware­ness, dis­trust and cor­rup­tion.

The sit­u­a­tion has been com­pounded by the in­crease in fraud­u­lent claims, par­tic­u­larly in the mo­tor ve­hi­cles sec­tor, which has seen in­no­cent pol­i­cy­hold­ers face high in­sur­ance pre­mi­ums.

Uganda and Tan­za­nia have the low­est pen­e­tra­tion ra­tios of about 0.9 per cent each, while Kenya and Rwanda have pen­e­tra­tion lev­els of about 3 per cent and 1.6 per cent re­spec­tively.

The $900 mil­lion Bu­ja­gali hy­dropower plant has added 250MW to Uganda’s elec­tric­ity grid and dou­bled the coun­try’s power gen­er­a­tion ca­pac­ity to 509MW.

The fund­ing for the project con­sisted of $200 mil­lion in eq­uity cap­i­tal from the project’s share­hold­ers.

The Aga Khan Fund for Eco­nomic De­vel­op­ment has co-in­vested in the project through its sub­sidiaries IPS and Ju­bilee. An­other investor is New York­based as­set man­ager Black­stone Group, which co-in­vested with its as­so­ci­ates Reser­voir Cap­i­tal and Sithe Global.

The share­hold­ing will be de­cided by the board of Bu­ja­gali.” Ju­bilee Hold­ings re­gional chief ex­ec­u­tive Julius Kip­ngetich

Pic­ture: Diana Ngila

Ju­bilee Hold­ings re­gional CEO Julius Kipng’etich (L) with com­pany chair­man Nizar Juma at the firm’s an­nual gen­eral meet­ing held at the Nairobi Ser­ena Ho­tel on Fri­day.

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