Sanlam Kenya shareholders have given the insurer the green light to raise additional Ksh 3.25 billion in fresh capital through a rights issue during the Extra-Ordinary General Meeting held on Wednesday.
According to Salam Kenya chairman Dr John Simba, the Rights Issue will be structured to raise target amount and will enable the firm to recapitalise its balance sheet by making an early repayment to an existing performing loan facility from Stanbic Bank Kenya PLC.
The firm also plans to use parts of the proceeds from the rights issue as working capital, providing the firm’s management with the operational flexibility and resources to drive the Group’s growth and profitability
“For purposes of undertaking the Rights Issue, the Company has at this EGM secured shareholder approvals to increase its share capital. The share capital will be increased by a maximum of Ksh 3.72 billion, up from Ksh 2 billion, divided into 400 million ordinary shares with a nominal value of Ksh 5 each,” said Dr Simba.
The shareholders also gave the board powers to undertake the rights issue and to allot and issue up to 1 billion ordinary shares with a nominal value of KES 5 each to the holders of the issued ordinary shares
Sanlam Kenya Group Chief Executive Officer Dr Nyamemba Tumbo said the rights issue will be fully underwritten by Sanlam Kenya’s parent company, Sanlam Allianz Africa Proprietary, a company incorporated in South Africa pursuant to which the Company will pick up any untaken rights that remain after rights have been allocated to all eligible shareholders.
All current Sanlam Kenya shareholders holding the firm’s issued ordinary shares and registered will be eligible to participate.
Sanlam plans to announce the rights issue price after securing necessary regulatory approvals.
Dr Tumbo said that the early repayment of the Stanbic Bank facility will reduce the Group’s long-term debt levels, which will save on interest costs currently being charged by the Group’s lenders.
“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,” added Dr Tumbo.
With a healthier 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.
