Old Mutual to acquire majority stake in UAP

January 27, 2015
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Peter Mwangi, Group CEO of Old Mutual in Kenya. Photo/ FILE
Peter Mwangi, Group CEO of Old Mutual in Kenya. Photo/ FILE

, NAIROBI, Kenya, Jan 27 – Old Mutual has agreed to purchase a further 37.3 percent of UAP’s existing share capital, increasing its stake to 60.7percent, subject to various regulatory approvals.

This follows the January 9 announcement that Old Mutual Holdings Limited, a subsidiary of Old Mutual plc had acquired 23.3 percent of UAP Holdings Limited.

“Old Mutual has notified the Capital Markets Authority of the offer it has made to and the acceptance from The Abraaj Group, AfricInvest and Swedfund, who collectively hold 37.3 percent of the shares in UAP. The notice includes an application to the CMA for an exemption from having to make a mandatory offer to all UAP shareholders under the CMA Regulations,” the firm said.

The consideration of Sh14.2 billion for the additional 37.3pc stake will be paid in cash and will be funded from existing group resources. The transaction is expected to complete this year.

Old Mutual says it has identified East Africa as a key region within sub-Saharan Africa in which we need scale. East Africa has strong economic growth, attractive demographics, improving infrastructure and a nascent and under-penetrated financial services industry.

“The majority stake we have secured in UAP, combined with the existing Old Mutual businesses in Kenya, will provide the group with the scale and product breadth to capitalise on the significant growth expected in the region. In Kenya, the largest and most advanced East African market, insurance penetration remains very low, at 3.16pc of GDP, but with gross written premiums predicted to grow at a compound annual growth rate of 18pc through to 2020.”

Julian Roberts, Group Chief Executive of Old Mutual plc, said: “We are delighted to have secured a majority stake in UAP. East Africa is a core growth market for Old Mutual and this transaction is a critical step in Old Mutual becoming an African financial services champion and further progress on our strategic agenda to transform the Group and improve its sustainable growth profile.”

“UAP has a strong position in East and Central Africa and a product offering that is highly complementary to our existing businesses.”

In Kenya, UAP has the third largest Property & Casualty market share; the second largest health insurance business; a substantial property investment portfolio and a fast growing life insurance business. It has established and diverse distribution networks including via brokers; an agency force; direct sales; bancassurance; digital; and supermarkets.

In Uganda, it has the second largest P&C and health insurance businesses, and the third largest life business. It also has P&C businesses in Rwanda, Tanzania and South Sudan, and a brokerage business in the Democratic Republic of Congo. It has more than 650,000 customers and in 2013 made Sh2.2 billion of operating profit before tax, gross written premiums of Sh12.7 billion and had a net book value of Sh13.9 billion.

Dr Joe Wanjui, Chairman of UAP, said: “This is an exciting development for our business and for our clients. The combined strengths of Old Mutual and UAP will give our customers unrivalled access to a full suite of financial services. Our partnership with Old Mutual is aligned with our vision of creating a revolutionary African financial services company that delivers what customers want and where they need it.”

“Following the conclusion of this transaction, we will have invested nearly USD300 million in the region since 2012. Combining Old Mutual and the UAP businesses will provide us with the capability and scale to offer fully integrated financial services including life, healthcare, P&C and banking products,” Ralph Mupita, Chief Executive of Old Mutual Emerging Markets, said.

Peter Mwangi, Group CEO of Old Mutual in Kenya said the two firms have operated in the Kenyan market for over 80 years and each has a very rich heritage in the East African region. “This partnership brings together the talents of two highly skilled and passionate teams dedicated to the realization of our shared aspiration to positively impact the lives of our customers.”

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