CIC Africa Insurance (Uganda) Ltd is offering 724,900 shares to cooperatives, unions, and savings and credit cooperative societies based in Uganda, the insurer said in a statement.
The ordinary shares will cost Shs10,000 each, with the minimum amount an entity can acquire set at 100. The company is seeking to raise Shs7.25 billion from the public offering, which opened on 17 October and will close on 14 April, 2017.
Proceeds from the offering will partly “recapitalise the company’s subsidiaries with the remainder being used for market expansion and to increase our capacity to make bigger investments,” the statement said.
The public offering – which will not be listed on a stock exchange – is the first of its kind in Uganda, according to Charles Nsamba, the public relations officer at the Capital Markets Authority of Uganda. CIC is using agents – African Alliance and Stanbic Bank – to sell the shares.
The Capital Markets Authority (amendment) act, 2011 says that an offer of securities to one person selected as a member of the public is as good as an offer of securities to the public. In this case, the members of Saccos and cooperatives are the public.
CIC is also positioning itself as a preferred insurer for Ugandan saccos and cooperatives, a role it has mastered in Kenya where it is the fourth largest insurance company. “Our flagship product is going to be the Loanguard insurance policy which is a loans insurance cover that provides loans protection against death and permanent disability of the members,” the statement said.
The shares will pay an annual dividend, a company representative told Uganda Business News.
The Capital Markets Authority has not yet fully approved the offer, however. CIC was issued a conditional approval until its provides the regulator “with everything we have asked for,” according to Nsamba. But he said approval will be given “in the shortest time possible.”
CIC Insurance Group, the insurer’s parent company, is listed on the Nairobi Securities Exchange. It grew out of the Kenya National Federation of Co-operatives, in which it was initially a department.
Its target market since 1978, when it became an insurance company, is cooperative associations. It describes itself as “the preferred underwriter of the 10-million-member Co-operative Movement in Kenya, which is also a founder member.”
The group’s shareholders – before it listed in Nairobi in 2012 – were cooperative societies; they still make up a sizable portion of the insurer’s shareholders.
The shares on offer will give Ugandan cooperatives and saccos a 49% shareholding in the insurer, while 51% will remain with Kenyan cooperatives.
The company said it does not intend to list on a securities exchange after the public offering. It will however “provide an exit strategy to shareholders should they opt to sell their shares in future in accordance with the company’s articles of association.”
CIC Insurance has a 0.12% market share in the non-life insurance market and 0.06% market share in the life insurance market, according to the 2015 Annual Insurance Market Report published by the Insurance Regulatory Authority of Uganda. It was licenced to operate by the IRA in January 2015.
