, NAIROBI, Kenya Jan 13 – The African Development Corporation has acquired a 25 percent stake in Resolution Health, as the medical insurance company looks towards expansion in the East African region.
Through the strategic partnership, ADC will inject Sh184 million into Resolution Health raising its core capital to Sh224 million.
Making the announcement, Resolution Health Chief Executive Officer Peter Nduati said part of the money would be used in its expansion program adding the company will also be looking to shore up its local operations.
"We were just not looking for money. ADC has a technical side that when they invest in a firm they bring on board expertise that helps us in our strategic direction," Mr Nduati said.
Resolution Health, which already has operations in Tanzania, plans to move into Uganda, Rwanda and Southern Sudan within the year.
ADC Chief Executive Officer Dirk Harbecke said the partnership offers the firm an opportunity to diversify its portfolio as well play an active role in the insurance sector in sub-Saharan Africa.
"The opportunities in insurance are substantial given the low penetration rate which is set to rise and we see ourselves being part of that growth," he said.
ADC will receive three shareholder seats on the Resolution Board and will offer input into the strategic direction of the company.
Mr Nduati revealed that out of the Sh224 million, the company plans to spend Sh160 million in the expansion program adding it was eyeing a number of acquisitions in the local market.
"The balance of that money we are going to use it to roll out new products. It\’s sort of our war chest and you might see a number of acquisitions in the near future," he said without specifying which companies they were targeting.
He did however say that they were targeting firms within the medical insurance sector.
With the fresh capital injection, Resolution Health is also looking at a possibility of listing at the Nairobi Stock Exchange by 2014.
Locally the company will be opening up offices in Nakuru and Malindi within the next two months as looks to grow its business locally.
"Health insurance is targeted to grow at 25 percent this year but we see ourselves growing by 45 percent," Mr Nduati said.
Resolution Health currently serves close to 42,000 individual customers and 900 corporate customers.
The value of the health services industry has risen steadily from Sh33 billion in 2004 to Sh51 billion in 2008. It is estimated that the annual medical insurance premium income is in excess of Sh6 billion. Follow the author at https://twitter.com/MjKaranja