City tycoon offers Sh9.9 billion for Britam director’s stake
Billionaire businessman Peter Munga is betting big on Britam with the announcement of his intention to acquire a 23.3 per cent stake in the listed financial services firm at an estimated cost of up to Sh9.9 billion.
The deal, which was announced on Tuesday, indicates that Mr Munga, through his investment vehicle, Plum LLP, is acquiring the stake belonging to Mr Dawood Rawat — the disgraced Mauritian director of the firm — temporarily, as Britam searches for a strategic investor to buy from him.
This means that Mr Munga is willing to put the substantial amount of money at stake in the hope that Britam’s fortunes will change for the better and allow him to sell at a premium.
The Mauritian Government is disposing of the 452,504,000 shares seized from Mr Rawat — who it accused of running a Ponzi scheme — in a transaction it hopes will help recover the Sh9.9 billion it paid victims of the fraud.
The Mauritian Government could prize the stake at Sh9.9 billion but leave room for negotiations based on the current market price.
Mr Rawat’s shares are currently valued at Sh6.3 billion based on Britam’s trading price of Sh14 per share at the Nairobi Securities Exchange, meaning that either the Mauritian Government will have to take a haircut or Mr Munga places a huge bet on the stake to pull the deal through.
“The proposed acquisition will give Britam and its shareholders the time it needs to identify a strategic investor with the institutional fit to support the company in the future,” said Plum LLP, in a public statement signed by Mr Munga, who declined to reveal the price at which he is buying the stake, citing confidentiality clauses in the agreement.
He, however, confirmed he had already paid a commitment fee and was waiting for regulatory approvals to complete the transaction.
Mauritian Minister for Financial Services Sudarshan Bhadain told the country’s parliament on March 29 that the government had opted to retain Britam’s shares instead of selling them before the June 30, 2015 deadline in the hope of fetching a better price.
The Mauritian Government took a 3.5 billion Mauritian Rupee (Sh9.9 billion) loan from its central bank to pay investors in Mr Rawat’s fraudulent scheme, while awaiting a better price on the tycoon’s Britam stake.
“We will have to repay that loan and we will repay that loan through the recovery procedures,” the minister is quoted saying in the Mauritian parliament’s hansard.
Mr Munga is betting on a steady recovery of the Britam share that was trading at around Sh28 in April last year before the assets were seized.
“I invested in Britam when I was 30 years old and I would not want to see someone who is not aligned to our strategy of growing the company come in,” Mr Munga said.
Upon completion of the deal, Mr Munga’s stake in Britam will rise to 38.5 per cent, worth Sh10.3 billion at the current price of Sh14 per share. The share has gained 19.3 per cent in the last three months.