Equity Bank founder eyes Sh6 billion stake in Britam

Equity Bank Board Chairman Peter Munga during the lender’s Annual General Meeting recently. Munga and his business associates plan to buy a 23.34 per cent stake in British-American Investments (Britam).(PHOTO: DAVID GICHURU/ STANDARD)

Equity Bank founder Peter Munga and his business associates plan to buy a 23.34 per cent stake in British-American Investments (Britam).

The shares they are seeking to purchase had been seized by the government of Mauritius from a disgraced businessman.

In a deal that will give him a near controlling stake in the insurance company, Munga yesterday announced that he had placed a bid for the stake.

Through Plum LLP, which is headquartered in Murang’a, Munga said in a public notice on Monday that it had served Britam Holdings Ltd its intention to acquire 452 million shares that account for 23.34 per cent stake of the issued shares in the company.

At the current share price of Sh14 per piece, the transaction could fetch at least Sh6.3 billion. After the acquisition, Plum LLP together with its associated persons and related companies will control 747 million shares in Britam.

No takeover

This will translate to 38.54 per cent of the total issued ordinary shares of Britam. This is excluding current combined shareholding of 27.78 per cent.

Plum said it expected the acquisition to be completed by July 31. Mauritius seized the stake from Dawood Rawat in April 2015 after accusing him of running a Ponzi-like scheme through a Mauritian insurer.

“The partners of Plum LLP, being investors in Britam through related companies and associated persons and being concerned by the uncertainties that the events in Mauritius were causing to Britam, determined to purchase the acquisition shares so as to provide Britam and its shareholders the time they require to identify a strategic investor with the institutional fit to drive Britam’s growth in the future,” Mr Munga, who identified himself as a manager of Plum LLP, said in the notice published yesterday.

“Consequently, they have entered into a share purchase agreement to acquire the acquisition shares,” Munga added.

But Munga said his associates are not interested in taking over the business after the acquisition that is expected to be completed next month.

This is after he applied for the exemption from the requirement to make a take-over offer on grounds that granting the exemption shall serve the wider interests of the firm’s shareholders.

“A takeover of Britam will result in the delisting of the shares of the company from the market and lock the public out of the opportunity to invest in Britam, one of the largest diversified financial services groups operating within the East African Region,” the notice adds.

Munga argued that it would be in the best interests of the company and its shareholders and the public as a whole, for Britam to maintain its listed status.

Currently Munga directly holds a 3.87 per cent shareholding in Britam. Another entity associated with him, Filimbi Ltd, owns a 3.02 per cent stake while Equity Bank, where he is chairman, controls a 20.78 per cent shareholding in Britam.

Ponzi scheme

Mauritius seized the assets of Rawat, a Mauritius citizen, in April last year after accusing him of running a Ponzi scheme through a Mauritian insurer. The Mauritian government later put on sale the Britam stake and had asked a bank in South Africa to help it find a buyer. Mauritius has been holding on the 25 per cent stake and had delayed to sell it on grounds that the share price was low.

The Mauritius government also revoked the licence of Bramer Banking Corporation, which is part of Mr Rawat’s Seaton Investment conglomerate. The Mauritius government is selling the tycoon’s assets to compensate investors who lost cash in the Ponzi scheme.

In the suspected fraud, Rawat is accused of collecting customer one-time premiums on an investment product called Super Cash Back Plan Gold on the promise of repaying an interest or bonus of between 10 and 14 per cent, the probe revealed.

Business
Premium Burdened Kenyans walk into Easter weekend broke
Business
Premium Looming crisis as top lenders stare at Sh500b in bad loans
Business
Premium Water PS Korir put on the spot over Sh14m dam land
Business
Premium Ruto's food security hopes facing storm amid fake fertiliser scam