Table of Contents
Key Points
- Sanlam Kenya will launch a $19.3 million rights issue to reduce debt, improve liquidity, and fund long-term growth following years of financial strain and shareholder approval.
- Proceeds will repay a Stanbic Bank loan, cutting interest expenses. The issue is fully underwritten by majority owner Sanlam Allianz Africa, guaranteeing full subscription.
- CEO Nyamemba Tumbo is driving a strategic shift by divesting non-core assets and focusing on core insurance operations to restore profitability and market confidence.
Sanlam Kenya Plc, a non-bank financial services provider backed by Kenyan investor Baloobhai Patel, has received regulatory approval to launch a $19.3 million rights issue aimed at strengthening its balance sheet and reducing debt. This marks a major step in the company’s ongoing transformation, reinforcing its role as a key player in the non-bank financial services sector and supporting its mission to promote inclusive financial confidence.
Capital raise to support growth and lower costs
The Ksh2.5 billion ($19.3 million) rights issue, which will open on April 25 and close on May 12, is part of a larger strategy to restore profitability after years of financial challenges.
In the past five years, the company has seen its market capitalization dip below $10 million amid a prolonged decline in its share price. The funds raised from the rights issue will primarily be used to prepay an existing loan from Stanbic Bank Kenya, reducing interest expenses and improving the company's liquidity.
Sanlam Kenya Chairman John Simba emphasized that the rights issue is an essential move to reduce the company’s debt and position it for long-term growth. “This capital infusion will provide operational and financial flexibility, allowing us to lower our debt to a more manageable level and better pursue profitable opportunities,” Simba said.
The rights issue is fully underwritten by Sanlam Allianz Africa Proprietary Limited, the firm’s majority shareholder, which guarantees the success of the offering, regardless of how much participation comes from minority shareholders.
Investor confidence amid challenges
The rights issue follows approval from shareholders at an extraordinary general meeting earlier this year and arrives at a critical juncture for Sanlam Kenya. Like many regional insurers, the company has faced ongoing pressure from low returns, stricter regulation, and sluggish economic growth.
After years of losses and several recapitalizations, Sanlam Kenya made a comeback in 2024, posting a Ksh1.05 billion ($8.11 million) profit, reversing a Ksh127 million ($0.98 million) loss from the previous year. This turnaround was driven by better underwriting performance, improved loss ratios, and stronger investment income.
Despite facing ongoing challenges, the company has made significant strides in refining its business model to align more closely with Sanlam Group’s broader pan-African insurance and asset management vision.
Baloobhai Patel’s continued support
Baloobhai Patel, one of Kenya’s most influential private investors, holds a 21 percent stake in Sanlam Kenya through his investment vehicle, Aksaya Investments. Known for his long-term approach to investing, Patel has stuck by the company despite its recent struggles, signaling his confidence in its ongoing restructuring efforts.
Patel’s investment portfolio spans several high-profile Kenyan companies, including Safaricom, Bamburi Cement, Absa Kenya, Williamson Tea, and Diamond Trust Bank. His continued involvement in Sanlam Kenya and other leading firms highlights his significant presence and influence across various sectors, from telecommunications to financial services.
