CIC shelves IPO, plans listing by introduction

By John Oyuke

CIC Insurance Group board has resolved to accelerate regional expansion and strengthen business units as it awaits listing approval.

Group CEO, Mr Nelson Kuria, said the insurer has opted not to wait initial public offering approval to list at the Nairobi Securities Exchange (NSE).

CIC submitted its application to the Capital Market Authority for approval of the proposed listing in January, marking the beginning of a journey to the bourse, where it now expects to launch its shares by introduction.

Kuria, however, said the firm does not need immediate additional capital to finance its expansion, saying the Group is adequately capitalised, with a share capital standing at Sh2.8 billion.

CIC Insurance Group CEO Nelson Kuria[Photo:Standard]

Rights issue

"CIC does not need to raise capital as it is adequately capitalised," he told Financial Journal last week.

He added that funds realised through the recent rights issue would go towards expansion in Uganda, Tanzania, Rwanda. The insurer plans to make foray into South Sudan, where it will partner with the co-operatives and church-based organisations rather than opening new subsidiaries.

CIC shelved plans for an IPO early this year after a lengthy bear run at the Nairobi Securities Exchange, opting for a listing by introduction, where existing shares are listed on the market and no capital is raised.

Through listing by introduction, existing shares are put on the market while still held by original shareholders. This means there is no initial offering to the public and the company does not raise capital. Once the shares are on the securities exchange, they can be traded publicly.

Kuria said after Capital Market Authority’s approval is received, all CIC existing shares would be listed by introduction.

Co-operative Bank, the country’s fourth-largest bank by assets, is the single largest shareholder in CIC Insurance with a 21 per cent stake, though sources disclosed it had increased its shareholding to 25 per cent.

The bank increased its stake after it bought shares left by shareholders who failed to exercise their rights last year, cementing the bank’s position as CIC’s largest shareholder.

At 25 per cent, Co-operative Bank now holds the maximum stake provided for by the insurance regulations which bar individuals and non-insurance institutional shareholders from owning more than a quarter of a firm.

"Though CIC does not intend to raise any capital, it is listing to provide an easy and efficient way for investors to buy and sell shares. The listing will provide us with an easy means for determining the value of the company," he added.

Managing director

CIC changed its name to CIC Insurance Group Limited two years in preparation for demerger of its life and general business operations.

Kuria said process — that began last year — is complete giving rise to CIC Life Assurance Ltd, CIC General Insurance Ltd, and CIC Asset Management Ltd as subsidiaries, each having a board and headed by a managing director.

He added that each of the subsidiaries have been adequately capitalised, disclosing the group has injected Sh300 million into CIC Asset Management and Sh700 million into CIC Life Assurance and CIC General Insurance respectively.

Kuria said after sustained high annual growth rate of more than 25 per cent in the last decade, CIC Insurance Group is in addition to regional expansion now focusing on maintaining its growth momentum through product innovation.

The Group, he added is also seeking way to accelerate the use of non-conventional distribution channels and accessible payment platforms targeting the mass market and tapping the fast growing micro-insurance niche.