German fund ADC buys 25pc of Kenya’s Resolution Health
German-based private equity fund, Africa Development Corporation last week said it had bought a 25 per cent stake in Kenya’s Resolution Health East Africa Ltd (RHEAL) at $2.3 million.
The acquisition is part ADC’S expansion plan to unlock more financial growth opportunities in sub-Saharan Africa.
Kenya becomes its first insurance venture on the continent, but the fifth overall supplementing its existing investments in banking and payment solutions in South Africa, Rwanda, Equatorial Guinea and Zimbabwe.
According to ADC’s director Dirk Harbecke, the corporation seeks to invest in more Africa’s banking, insurance and finance systems where its European and American investors see potential for growth.
“The industries are rapidly growing and we intend to provide them with capital as we build links to the international markets,” he said.
Kenya’s medical insurance sector has grown at annual average rate of 25 per cent per annum with the value of the health services industry going up from $33 billion to $51 billion between 2004 and 2008, according to government Economic Survey figures.
RHEAL premium growth has at the same time been in excess of 40 per cent annually, exceeding the industry’s growth rate.
The medical provider with presence in Kenya and Tanzania now counts on the partnership to spread wings into other African countries ahead of its listing on the Nairobi Stock Exchange by 2014.
The potential countries include Uganda, Rwanda and Southern Sudan, the Provider said.
Shareholders approved the plan for an acquisition in 2009, but Resolution has taken time to identify a strategic partner to finance funds while offering expertise in strategic planning and technological know how.
“It has taken us 12 months to switch from local to foreign investors until we settled for ADC,” said Peter Nduati, the Group chief executive officer.
ADC has also been granted extensive supervision and co-determination rights with respect to RHEAL.
The grant will see East Africa’s medical sector tap from ADC’s management approach used to align processes with international standards.
Approximately 42,000 private individuals and nearly 900 Kenyan companies are currently utilising RHEAL’s insurance services.
The company co-operates with more than 350 medical facilities in the region.
With a market share of more than 10 per cent and annual premium income of more than $12.5 million, RHEAL is one of the three leading health insurers in Kenya.
However, the provider said the acquisition will not lead to any alterations as ADC had bought a strategic plan acquiring three seats on the board while the solution retained four.
The investment closely follows ADC’s successful Initial Public Offering on the Frankfurt Stock Exchange last December.
ADC expressed intentions of more acquisitions in Eastern and South African companies this year to add to Simtel, Rwanda, Iveri Payment Technologies South Africa, Banco Nacional de Guinea Equatorial (Equatorial Guinea), Premier Finance Group (Zimbabwe) and the newly acquired Resolution Health (Kenya)
“We are eyeing companies in Uganda, Tanzania, Burundi and Zambia in their early stages of development. It’s hard to support big companies,” said Mr Harbecke.
