The listed non-bank financial services firm Sanlam Kenya is set to enjoy improved financial health, which is necessary to steer it to higher profitability, following a KES 3.250 billion Rights Issue approval by its shareholders on Wednesday.
Sanlam Kenya shareholders attending an Extra-Ordinary General Meeting (EGM) have approved it’s Board of Directors’ request to recapitalise the leading general and life insurance Company’s balance sheet through a Rights Issue program.
Speaking at the EGM, Sanlam Kenya Chairman Dr John Simba said the Rights Issue will be structured to raise up to Ksh 3.250 billion and will enable the Company to recapitalise its balance sheet by making an early repayment to an existing performing loan facility from Stanbic Bank Kenya PLC.
Dr Simba said part of the rights issue proceeds will also be used 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 3.720 billion, up from Ksh 2 billion, divided into 400 million ordinary shares with a nominal value of Ksh 5 each,” Dr Simba said.
He added, “The EGM has also authorised and granted the Board of Directors the necessary power to carry out a 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 CEO 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. Once the regulatory approvals for this capital raising process are secured, the rights issue price will be announced soon.
Dr Tumbo noted 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.
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.
“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.
Guided by a professional management and staffing team, the Group’s medium-term outlook is to ensure management projects sustainable growth in market share supported by agility in pricing and innovation, unlocking value in our partnerships with bancassurance and technology partners, capital optimisation, and an effective control environment.
