In january this year Old Mutual acquired 23.3% of UAP Holdings, and has now agreed to purchase a further 37.3% of UAP‘s existing share capital, increasing its stake to 60.7%, subject to various regulatory approvals.
Old Mutual has notified the Capital Markets Authority (“CMA”) in Kenya of the offer it has made
to and the acceptance from The Abraaj Group, AfricInvest and Swedfund, who collectively
hold 37.3% of the shares in UAP. The notice includes an application to the CMA for an
exemption from having to make a mandatory offer to all UAP shareholders under the CMA
The consideration of KES 14.2 billion for the additional 37.3% stake will be paid in cash and will be funded from existing Group resources. The transaction is expected to complete during 2015.
Rationale for the transaction
Old Mutual has identified East Africa as a key region within sub-Saharan Africa in which we
need scale. East Africa has strong economic growth, attractive demographics, improving
infrastructure and a nascent and under-penetrated financial services industry.
The majority stake we have secured in UAP, combined with the existing Old Mutual businesses
in Kenya, will provide the Group with the scale and product breadth to capitalise on the
significant growth expected in the region.
In Kenya, the largest and most advanced East African market, insurance penetration remains very low, at 3.16% of GDP, but with gross written premiums predicted to grow at a compound annual growth rate of 18% through to 2020.
Julian Roberts, Group Chief Executive of Old Mutual plc, said: “We are delighted to have
secured a majority stake in UAP. East Africa is a core growth market for Old Mutual and this
transaction is a critical step in Old Mutual becoming an African financial services champion
and further progress on our strategic agenda to transform the Group and improve its
sustainable growth profile.”
UAP has a strong position in East and Central Africa and a product offering that is highly
complementary to our existing businesses.
In Kenya, UAP has the third largest Property & Casualty (“P&C”) market share; the second
largest health insurance business; a substantial property investment portfolio and a fast
growing life insurance business. It has established and diverse distribution networks including
via brokers; an agency force; direct sales; bancassurance; digital; and supermarkets.
In Uganda, it has the second largest P&C and health insurance businesses, and the third largest
life business. It also has P&C businesses in Rwanda, Tanzania and South Sudan, and a
brokerage business in the Democratic Republic of Congo. It has more than 650,000 customers and in 2013 made KES 2.2 billion of operating profit before tax, gross written premiums of KES
12.7 billion and had a net book value of KES 13.9 billion.
Dr Joseph Wanjui, Chairman of UAP, said: “This is an exciting development for our business and
for our clients. The combined strengths of Old Mutual and UAP will give our customers unrivalled
access to a full suite of financial services. Our partnership with Old Mutual is aligned with our
vision of creating a revolutionary African financial services company that delivers what
customers want and where they need it.”
Ralph Mupita, Chief Executive of Old Mutual Emerging Markets, said: “Following the
conclusion of this transaction, we will have invested nearly USD300 million in the region since
2012. Combining Old Mutual and the UAP businesses will provide us with the capability and
scale to offer fully integrated financial services including life, healthcare, P&C and banking
Peter Mwangi, Group CEO of Old Mutual in Kenya said: “Both Old Mutual and UAP have
operated in the Kenyan market for over 80 years and each has a very rich heritage in the East
African region. This partnership brings together the talents of two highly skilled and passionate
teams dedicated to the realization of our shared aspiration to positively impact the lives of our
Background to the transaction
Old Mutual Emerging Markets has allocated R5 billion ($500 million) to invest in financial services
operations in sub-Saharan Africa. We deployed R700 million of this in buying Oceanic Life and Oceanic
General Insurance in Nigeria during Q1 2013, Provident Life Assurance in Ghana during Q4 2013 and
Faulu Microfinance Bank in Kenya in early 2014. In 2014, Nedbank, Old Mutual’s banking subsidiary,
exercised its rights to subscribe for a 20% shareholding in Ecobank Transnational Incorporated (ETI)
for $494 million, creating the largest banking network in Africa, comprising more than 2,000 branches
and offices in 39 countries. It has also invested $24.4 million in taking a 36.4% stake in Banco Unico in