Insurance group Britam Holdings is set to exit the real estate market by selling its 48.2 percent stake in HF Group.
This comes at a time Britam is experiencing a business overhaul, as the management is keen on doing away with the undoings of former CEO Benson Wairegi.
Business Times understands that Britam could retain a small stake in HF as a passive investor.
“The new board is working to undo the unprofitable empire building that was done by Wairegi. After letting go the group chairman Mr Andrew Hollas, the Group ceo Wairegi, and the top executives, they have now turns into the business,” said a source from the company.
Britam bought its HF Group stake from Equity Bank in 2015 for about Ksh42 per share, against the recommendation of several members of the management team.
The share price for HF share price has fallen to Ksh3.48, a 90% loss of value, placing Britam’s stake at Ksh646 million. HF’s current market capitalisation stands at Ksh1.34 billion.
The insurer invested more than Ksh5 billion to acquire the HF stake through several transactions, including the buyout of Equity Group’s 24.7 percent ownership in the mortgage lender in 2014 for Ksh2.8 billion.
This means that Britam has lost over Ksh4.5 billion over the years as a result of share value erosion.
It’s noteworthy that after buying HF, Wairegi became the chair of the investment and strategy committee and then HF ended up making some loans to real estate companies associated with a Britam Director.