Jubilee wants a bigger slice of Bujagali
Company currently owns a 25 per cent stake, and is awaiting approval for additional shares
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
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.