Sanlam Kenya has received shareholder approval to raise Ksh 3.25 billion in fresh capital through a rights issue, following an Extra-Ordinary General Meeting (EGM) held on Wednesday. The rights issue will allow the insurer to enhance its share capital by a maximum of Ksh 3.72 billion, up from the current Ksh 2 billion, marking a significant step in the firm’s capital restructuring strategy.
The new share capital structure will be divided into 400 million ordinary shares with a nominal value of Ksh 5 each. According to Sanlam Kenya Chairman Dr. John Simba, the move is aimed at strengthening the company’s balance sheet by reducing long-term debt and boosting operational capacity.
Strategic Use of Funds
Dr. Simba emphasized that the capital raised would be utilized strategically. “The Rights Issue will enable the firm to recapitalize its balance sheet through an early repayment of an existing performing loan facility from Stanbic Bank Kenya PLC,” he said. This repayment is expected to reduce the company’s long-term debt burden, translating into significant savings on interest expenses.
In addition to debt repayment, part of the proceeds will be allocated as working capital. This will give the management greater operational flexibility, allowing Sanlam Kenya to focus on driving growth and profitability in its core insurance businesses.
Enhanced Shareholder Confidence
The approval also included an increase in the company’s share capital to facilitate the rights issue. Shareholders authorized the board to allot and issue up to 1 billion ordinary shares with a nominal value of Ksh 5 each. This approval ensures all current shareholders holding issued ordinary shares and registered with the firm will be eligible to participate in the rights issue.
Sanlam Kenya Group CEO, Dr. Nyamemba Tumbo, reassured stakeholders that the rights issue will be fully underwritten by the company’s parent firm, Sanlam Allianz Africa Proprietary, based in South Africa. The underwriting arrangement guarantees that any untaken rights will be picked up, ensuring the success of the capital raise.
Dr. Tumbo highlighted the strategic efforts Sanlam Kenya has undertaken to streamline its operations and reduce its debt portfolio. “In recent years, we have worked to tighten and enhance our capital and investment 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,” he stated.
Regulatory Approvals and Pricing
The next step in the rights issue process involves securing regulatory approvals. The rights issue price will be announced after these approvals are obtained, providing clarity on the cost per share for participating shareholders.
A Stronger Future
Sanlam Kenya’s leadership is optimistic that the fresh injection of capital will position the company for future growth. With a healthier balance sheet, the insurer is focusing on pioneering inclusive financial services in the non-bank financial sector. This strategy aligns with its broader goal of fostering financial confidence and delivering enhanced shareholder value.
Dr. Tumbo underscored the company’s vision, stating, “With strengthened capital reserves, we are well-positioned to expand our footprint and continue innovating in the provision of diversified financial services.”
The decision to proceed with the rights issue reflects Sanlam Kenya’s commitment to prudent financial management and sustainable growth. Shareholders’ confidence in the board’s vision and strategy marks a crucial milestone in the company’s journey toward enhanced profitability and industry leadership.
As Sanlam Kenya embarks on this transformative phase, the successful execution of the rights issue will be pivotal in ensuring its continued growth and resilience in a competitive insurance market.
