Jubilee stock gains 33pc in Allianz deal

Jubilee stock gains 33pc in Allianz deal

Jubilee Holdings #ticker:JUB has gained Sh5.2 billion in valuation at the NSE after the firm announced last week the sale of stakes in its regional general insurance subsidiaries to German conglomerate Allianz SE for Sh10.8 billion.

The notice of the deal was issued last Tuesday, triggering a rally in the firm’s share price from Sh220 to Sh291.75 at the close of trading on Friday, a 32.6 percent gain. The share price was unchanged in Monday’s trading.

The share price gain saw Jubilee’s market capitalisation— the measure of investor wealth at the bourse— go up from Sh15.94 billion to Sh21.14 billion, with the share now trading at a near seven-month high.

Investors could be eyeing a potential special dividend payout from the proceeds of the deal, while the cash is also likely to go into strengthening the company’s existing business thus improving earnings down the road.

Jubilee Holdings chairman Nizar Juma said last week the company plans to reinvest the cash generated from the deal in its portfolio of privately held companies, adding that this will continue its strategy of lessening exposure to the volatile stock market.

He said other decisions, including whether or not the company will pay a special dividend, will be made later.

Jubilee has one of the more generous dividend policies at the stock market, paying Sh9 per share for the year ended December 2019 and also an interim dividend of Sh1 per share for the half year ended June 2020.

The firm has 72.47 million issued shares, meaning it paid a total of Sh652.26 million in dividends to its shareholders last year.

Under the Allianz deal, which is awaiting regulatory approval, the German firm will acquire controlling stakes of between 51 percent and 66 percent in Jubilee’s short-term or general insurance units in Kenya, Uganda, Tanzania, Burundi and Mauritius.

Jubilee Holdings will receive Sh7.75 billion while the rest will be invested in the operating businesses.

As part of the transaction, Allianz’s subsidiary in Kenya (Allianz Insurance Company of Kenya Limited) will be merged into Jubilee General Insurance Limited, which handles covers for fire, accident and theft.

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