Sanlam Kenya's Sh2.5 billion rights issue to open on April 25

Listed non-banking financial services Sanlam Kenya has announced a rights issue, which seeks to raise at least Sh2.5 billion.

The issue is set to open in two weeks following the necessary regulatory approvals.

Sanlam Kenya chairman John Simba said the Sh2.5 billion rights issue will enable the company to recapitalise its balance sheet by settling a loan facility from Stanbic Bank Kenya.

He also affirmed that all current ="https://www.standardmedia.co.ke/business/article/2001343444/insurance-firm-sanlam-kenya-to-layoff-workers">Sanlam Kenya registered shareholders< holding the firm’s issued ordinary shares will be eligible to participate.

The company has secured all the regulatory and related approvals from the Capital Markets Authority of Kenya, the Nairobi Securities Exchange, Insurance Regulatory Authority and the South African Reserve Bank ahead of the commencement of the rights issue, which is now set to open on Friday, 25 April and close on May 12.

“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,” Simba said in a statement, as he announced the rights issue’s timetable.

While part of the funds will be used to retire the Stanbic debt, Simba also said that part of the proceeds will be used to provide management with the operational and financial flexibility to drive the ‘group’s growth ambitions and sustain its profitability.”

The rights issue follows shareholder approval late last year during an extraordinary general meeting called to consider recapitalising the company’s balance sheet to drive its profitability.

The transaction will be spearheaded by the lead transaction advisor Absa Bank Kenya, lead sponsoring broker Absa Securities, legal advisor Anjarwalla & Khanna LLP, and reporting accountant KPMG Kenya.

Stanbic Bank Kenya will be the receiving bank, share registrar Image Registrars and Oxygene MCL as marketing consultants.

Sanlam Kenya chief executive Nyamemba Patrick Tumbo said the rights issue is fully underwritten by Sanlam Kenya’s parent company, Sanlam Allianz Africa Proprietary, incorporated in South Africa, which has undertaken to pick up any untaken rights that remain after allocation to all eligible shareholders.

Dr Tumbo said early repayment of the Stanbic Bank facility will reduce the group’s long-term debt levels, saving on financing costs currently being charged by the group’s lenders.

With a strong balance sheet and capital reserves, the firm, he said, is training its sights on pioneering inclusive financial confidence by investing in diversified non-bank financial services provision.

“In recent years, we have strategically worked to tighten and enhance our capital and investments management by retiring and restructuring our debt portfolio, divesting from real estate and winding up dormant subsidiaries. These efforts have enabled the Group to maintain a razor-sharp focus on its core insurance businesses, guaranteeing better returns to shareholders,” Dr Tumbo said.

The Group’s medium-term outlook seeks to ensure management projects sustainable growth in market share supported by agility in pricing and innovation, unlocking value in its partnerships with bancassurance and technology partners, capital optimisation and an effective control environment, guided by a seasoned board with diverse skills, professional management and staffing team.

Sanlam’s areas of expertise include life and general insurance, financial planning, retirement, investments, and wealth management.

Established in 1918 as a life insurance company and headquartered in South Africa, Sanlam has evolved into one of the largest non-banking financial services group in Africa through its diversification strategy.