BRITAM announces oversubscription of corporate bond

By Ronald Owili

The bond aimed at raising a total of 5B shillings in two tranches raised 7.4B shillings

British American Investments Company has announced a 147.7 percent oversubscription of its corporate bond which sought to raise 3 billion shillings in the first tranche.

The bond aimed at raising a total of 5 billion shillings in two tranches but instead it raised 7.4 billion shillings ensuring the firm does not go into second borrowing in the market.

BRITAM Group Managing Director Benson Wairegi says the cash will give the company the momentum to continue with its regional expansion plans.

The Nairobi Securities Exchange listed firm announced in May its plans to go into the market to raise additional capital to see through its strategic plan which focuses on expansion and acquisitions that will help it strengthen its foothold in the region.

Britam which is involved in Insurance, Asset management, Banking and Property has operations in Kenya, Uganda, Rwanda and South Sudan.

To get the extra capital to push this growth strategy, the firm announced a two part corporate bond issue targeting 5 billion shillings following approval from market regulators.

In the first tranche, the firm set to raise 3 billion shillings, with two billion shillings in the second tranche.

To what the group terms as market confidence, the company raised 7.4 billion shillings in the first part representing a 147.7% oversubscription therefore nullifying plans to go into second bond issue to raise the balance.

In a statement, Group managing director says, “The massive participation in the corporate bond is a validation of the confidence the market has in the Group. The funds will give us the additional impetus needed to take our Group to the next level of growth in line with our strategic plan.”

However according to the Greenshoe option which Britam included when seeking approval from the Capital Markets Authority, the firm is allowed to retain 6 billion shillings of the bond offers.

The transaction saw leading fund managers contribute 50.9 per cent, Bank and insurance companies jointly at 41 per cent and retail investors at 8.1 per cent of the total capital raised.