Mauritius insurance major MUA makes rights issue of Rs 325.65 mn to fund East African foray
MUA is seeking to raise Rs 325,650,000 through a rights issue to strengthen its capital base, following the acquisition of PTHL in 2014, and also to place the Mauritius-based insurance major in a better position to capitalise on future expansion opportunities in East Africa.
Mauritian insurance major, Mauritius Union Assurance Cy. Ltd (MUA), has received the approval of the Listing Executive Committee of the Stock Exchange of Mauritius Ltd (SEM) and of the Financial Services Commission to proceed with a rights issue of up to 5,010,000 new ordinary shares of par value Rs 10.00 each at an issue price of Rs 65.00 per share, in the ratio of 1 New Ordinary Share for every 8 ordinary shares held on 21 August 2015.
This represents a maximum amount of Rs 325,650,000 and the listing committee has approved the admission for listing of new ordinary shares on the Official Market of the SEM by way of the rights issue.
The MUA group crossed another crucial milestone in 2014 with the acquisition of Phoenix Transafrica Holdings Limited (PTHL), a company incorporated in Kenya, which holds controlling interests in Phoenix of East Africa Assurance Company Ltd, in a transaction valued at USD 22.6 million. Through this transaction, the MUA group has gained an entry into the general insurance markets of Kenya, Tanzania, Uganda and Rwanda and is now in a prime position to benefit from the growth of the insurance sector in East Africa.
The acquisition of PTHL by MUA in 2014 was partly financed by the Company’s own funds and this has increased MUA’s capital needs. The proceeds from the rights issue will thus contribute to the increased level of capital required by MUA to operate. In addition, should any investment opportunities arise in the future, MUA shall be in a better position to capitalise on these opportunities.
The new ordinary shares will be listed and traded on the Official Market of the SEM as from 19 October 2015. Shareholders of MUA opting not to take up their rights shares may freely trade same on the SEM from 16 September 2015 to 23 September 2015. Shareholders of MUA who subscribe for all new ordinary shares to which they are entitled under the present rights issue may also apply, on the same terms and conditions, for new ordinary shares in excess of their entitlement.
The board has determined the issue price for the new ordinary shares at MUR 65.00 per share, equivalent to a discount of approximately 15% to both the three months volume weighted average share price of MUR 76.64 and the theoretical ex-rights price of MUR 76.56. Both discounts have been calculated as at 11 June 2015, being the last dealing date before the rights issue was made public by the cautionary announcement of 12 June 2015.
The directors confirm that they have made due enquiries and held requsite consultations and are satisfied with a discount of approximately 15%. They believe that the resulting issue price of MUR 65.00 per share for the rights issue is fair and reasonable to the company.
MUA has been providing insurance services in Mauritius for over 65 years, focusing both on the short term and long term segments of the market.
With the acquisition of Phoenix Transafrica Holdings Limited transaction; the MUA group has gained an entry into the general insurance markets of Kenya, Tanzania, Uganda and Rwanda and is now in a prime position to benefit from the growth in the insurance sector in East Africa.
As at 31 December 2014, the MUA group generated revenues of Rs 2,772 million and net profit of Rs 169 million.