Sanlam Kenya, backed by Kenyan investor Baloobhai Patel, to boost $19.3 million in rights problem

Key Factors

• Sanlam Kenya will launch a $19.3 million rights problem to cut back debt, enhance liquidity, and fund long-term development following years of economic pressure and shareholder approval.
• Proceeds will repay a Stanbic Financial institution mortgage, reducing curiosity bills. The problem is absolutely underwritten by majority proprietor Sanlam Allianz Africa, guaranteeing full subscription.
• CEO Nyamemba Tumbo is driving a strategic shift by divesting non-core belongings and specializing in core insurance coverage operations to revive profitability and market confidence.

Sanlam Kenya Plc, a non-bank monetary providers supplier backed by Kenyan investor Baloobhai Patel, has obtained regulatory approval to launch a $19.3 million rights problem aimed toward strengthening its steadiness sheet and lowering debt. This marks a significant step within the firm’s ongoing transformation, reinforcing its position as a key participant within the non-bank monetary providers sector and supporting its mission to advertise inclusive monetary confidence.

Capital elevate to help development and decrease prices

The Ksh2.5 billion ($19.3 million) rights problem, which is able to open on April 25 and shut on Might 12, is a component of a bigger technique to revive profitability after years of economic challenges.

Prior to now 5 years, the corporate has seen its market capitalization dip under $10 million amid a chronic decline in its share value. The funds raised from the rights problem will primarily be used to prepay an present mortgage from Stanbic Financial institution Kenya, lowering curiosity bills and enhancing the corporate’s liquidity.

Sanlam Kenya Chairman John Simba emphasised that the rights problem is a vital transfer to cut back the corporate’s debt and place it for long-term development. “This capital infusion will present operational and monetary flexibility, permitting us to decrease our debt to a extra manageable stage and higher pursue worthwhile alternatives,” Simba stated.

The rights problem is absolutely underwritten by Sanlam Allianz Africa Proprietary Restricted, the agency’s majority shareholder, which ensures the success of the providing, no matter how a lot participation comes from minority shareholders.

Investor confidence amid challenges

The rights problem follows approval from shareholders at a rare common assembly earlier this 12 months and arrives at a vital juncture for Sanlam Kenya. Like many regional insurers, the corporate has confronted ongoing strain from low returns, stricter regulation, and sluggish financial development.

After years of losses and a number of other recapitalizations, Sanlam Kenya made a comeback in 2024, posting a Ksh1.05 billion ($8.11 million) revenue, reversing a Ksh127 million ($0.98 million) loss from the earlier 12 months. This turnaround was pushed by higher underwriting efficiency, improved loss ratios, and stronger funding revenue.

Regardless of dealing with ongoing challenges, the corporate has made vital strides in refining its enterprise mannequin to align extra intently with Sanlam Group’s broader pan-African insurance coverage and asset administration imaginative and prescient.

Baloobhai Patel’s continued help

Baloobhai Patel, considered one of Kenya’s most influential personal buyers, holds a 21 p.c stake in Sanlam Kenya by way of his funding automobile, Aksaya Investments. Recognized for his long-term method to investing, Patel has caught by the corporate regardless of its latest struggles, signaling his confidence in its ongoing restructuring efforts.

Patel’s funding portfolio spans a number of high-profile Kenyan firms, together with Safaricom, Bamburi Cement, Absa Kenya, Williamson Tea, and Diamond Belief Financial institution. His continued involvement in Sanlam Kenya and different main companies highlights his vital presence and affect throughout numerous sectors, from telecommunications to monetary providers.