, NAIROBI, Kenya, Jan 27 – British American Investment Company (Britam) has issued a circular to shareholders on the proposed acquisition of a 99 percent equity stake in Real Insurance Company Limited disclosing the price as Sh1.4 billion with Sh825 million in cash and Sh550 million in share consideration.
The shares are priced at Sh11.13, some 75 trading days preceding the share purchase agreement resulting in the issuance of 51.9 million shares.
The Extraordinary General Meeting to approve the deal is slated for February 19, 2014, with the transaction expected to be complete by 31 March 2014.
In determining the acquisition, Britam considered the strong positioning of Real Insurance in non-life insurance, long operational history and customers that comprise leading corporates in Kenya.
They also considered the growth prospects given the presence of the firm in promising frontier markets such as Mozambique, Tanzania and Malawi.
Real Insurance is considered a pioneer in the Kenyan insurance sector having started operations in 1910. It offers insurance services through its 15 branches located in Nairobi and other major towns in Kenya as well as three subsidiaries in Tanzania, Malawi and Mozambique. The firm is also a global network partner of RSA (formerly known as Royal and Sun Alliance Insurance Group).
Through this acquisition Britam should increase its market share and after completion, rank second in the market on gross premium basis.
The acquisition is also seen as a first step in the consolidation of the highly fragmented insurance industry with Kenya having 47 licensed insurance companies competing for a limited market characterized by low penetration.
The satisfactory completion of this transaction will enable Britam to implement its strategy of expanding its general insurance business and diversifying its presence into key geographical areas that include some of the most promising growth frontier markets in Africa.