South Africa’s insurance giant Sanlam Limited has raised its stake in Sanlam Kenya to 71.47 percent after injecting additional capital of Sh461.5 million in the subsidiary’s rights issue.
The multinational previously held a 57.14 percent shareholding in the Nairobi Securities Exchange-listed insurer, which says it raised the entire target of Sh2.5 billion in the cash call whose results were disclosed on Wednesday.
By raising its stake, the multinational has substantially diluted other investors, with those who snubbed the cash call suffering an even larger shrinkage of their ownership.
Sanlam Limited was entitled to buy 285.6 million new shares at a price of Sh5 each, a move that saw it spend Sh1.42 billion to defend its stake in the first stage of the transaction.
The multinational, through its investment vehicle Sanlam Allianz Africa Proprietary Limited, acquired an extra 92.3 million shares at a cost of Sh461.5 million in its role as the underwriter (buyer of last resort) in the rights issue.
“Sanlam Allianz Africa Proprietary Limited has subscribed for all the untaken rights in connection with the rights issue,” Sanlam Kenya said when it announced the results of the capital raise.
The parent company spent a total of Sh1.89 billion in the right issue, amounting to 75.6 percent of the new capital.
Shareholders were offered 125 new shares for every 36 held in the transaction that has raised the number of issued shares to 644 million from the previous 144 million.
The new 500 million shares are set to begin trading on June 4 when they will be listed on the NSE.
Before the multinational took up its role as the underwriter, the rights issue had registered an 82 percent performance rate after shareholders bought a total of 407.6 million shares under entitlement and additional subscriptions.
The insurer says a section of minority investors applied for additional 5.06 million shares at a cost of Sh25.3 million, indicating that they will suffer a smaller dilution rate than the overall 33.4 percent implied by Sanlam Limited’s new ownership.
The NSE-listed firm had earlier sought to raise up to Sh3.25 billion in the cash call before settling on Sh2.5 billion.
The insurer plans to use the new capital to reduce its debt burden which has seen it incur heavy payments to its lenders.
Its borrowings stood at Sh4.2 billion in the year ended December 2024, down from Sh4.6 billion a year earlier. Its finance costs meanwhile rose to Sh734.8 million from Sh604.6 million over the same period.
Among the loans that Sanlam Kenya has been juggling in recent years was a Sh4 billion credit facility from Stanbic Bank and which was due in February this year after an earlier restructuring.
Besides the insurer, Standard Group is the other listed firm that has launched a rights issue recently, with the media firm in the market to raise Sh1.5 billion.
Sanlam Kenya posted a net profit of Sh1 billion in the year to December 2024, reversing a net loss of Sh126.5 million the year before on the back of strong investment returns.
