The main shareholder of Uganda’s National Insurance Corporation (NIC) plans to take up its stake in a rights issue that kicks off on Friday.
Industrial and General Insurance Company Limited (IGI) of Nigeria which owns 60 per cent of NIC through Corporate Holdings Limited has said that it intends to take up the rights which it is entitled to.
According to the Uganda Securities Exchange (USE) listed company’s information memorandum, a minimum of 40 per cent of the rights issue or 129.24 million of the 323.1 million shares on offer must be accepted for the cash call to be declared a success.
This gives the cash call which will be open through December 13, very high chances of realizing its goal.
“Corporate Holdings Limited, whose shareholding comprises 60 per cent of the issued and fully paid up share of NIC, intends to take up its rights, provided the maximum shareholding of Corporate Holdings Limited is limited to 60 per cent of the post-rights issue issued and fully paid up shares of NIC,” notes the information memorandum.
NIC says that in the event the minimum amount is not attained, it may seek approval from the Capital Markets Authority to proceed with the listing of the accepted fully paid new shares and may consider raising other capital in future.
Each share is being sold for Ush26 ($0.01) in the ratio of 4 shares for every 5 shares held, to existing shareholders who had to be on the register by November 15.
NIC, which is the largest private insurance company in Uganda, is undertaking the first cash call by a listed company in any of the four East African bourses this year and is seeking to raise Ush8.4 billion ($3.3 million).
NIC chairman Remi Olowude, in disclosures contained in the information memorandum, said that part of the proceeds from the rights issue have been earmarked for financing the automation of work flow processes and the re-branding of the insurer while providing working capital.
“The proceeds of the first rights issue can be used…to increase NIC’s capacity to underwrite big risks taking advantage of the emerging opportunities in the oil and energy sector, establish more branches, build up the investment portfolio and recapitalize the life insurance portfolio of NIC to meet solvency margin requirements,” said Mr Olowude.
The shares are being offered at a 25.71 per cent discount to its last traded price of Ush35 ($0.01) at the USE, which is the same price at which it closed the end of last year.
NIC’s joint lead transaction advisors Crested Stocks and Securities and Standard Investment Bank said the insurer’s net asset value per share as at the end of December last year and June this year was Ush65.85 ($0.026) and Ush71.64 ($0.028) respectively.
This means that shares under the cash call are being offered 63.71 per cent discount based on the latest net asset value for the period ended June this year.
Its largest shareholder, IGI, is among the largest insurance companies in Nigeria and among the largest underwriters in West Africa.
As of August this year, Crane Bank held a 10.33 per cent stake or 41.72 million shares of NIC, Sudhir Ruparelia, the single largest individual shareholder held a 10.27 per cent stake or 41.48 million while 1,802 shareholders controlled the remaining 19.39 per cent or 78.46 million shares.