Sanlam Kenya has reduced the amount of money it wants to raise from its shareholders to recapitalise its balance sheet and settle a loan from Stanbic Bank Kenya by slightly over a fifth to Sh2.5 billion.
The company, which said it has received regulatory approvals, had in November last year indicated that it intended to raise Sh3.25 billion through a rights issue but has now lowered this target.
A rights issue is a fundraiser strategy whereby a firm invites its existing shareholders to purchase additional shares in the company.
This type of issue offers these shareholders securities called rights. Companies frequently issue a rights offering to raise additional capital.
In a statement released on Friday, Sanlam Kenya said it has received the nod of three regulatory approvals including from the Capital Markets Authority of Kenya, the Nairobi Securities Exchange , the Insurance Regulatory Authority, and the South African Reserve Bank.
The Rights Issue is scheduled to open on April 25 and close on May 12, 2025.
“The purpose of the Rights Issue is to bring the Group’s indebtedness to a more sustainable level and will specifically enable the company to reduce its long-term debt levels, which will save on financing costs currently being charged by the company’s lenders,” said Sanlam Kenya Chairman John Simba.
The success of the rights issue will be dependent on major shareholders’ participation.
“While part of the funds will be used to retire the Stanbic debt, a part of the proceeds will also be used to provide management with the operational and financial flexibility to drive the Group’s growth ambitions and sustain its profitability,” added Simba.
The company’s shareholders had approved the rights issue late last year during an Extraordinary General Meeting called to consider recapitalising the company’s balance sheet to drive its profitability.
Sanlam Kenya is 57.14 percent owned by Hubris Holdings Limited, which is fully owned by Sanlam Limited—a South African company listed on the Johannesburg Stock Exchange.
The amount will be crucial in saving the firm from a liquidity squeeze given that its entire Sh4.66 billion debt is maturing before mid-2025.
