Britam has invested the sale of its stake in Equity Group into fixed income.
The move is aimed at cushioning against volatility from the underwriter’s investments portfolio.
Britam completed a sale of a 6.7 percent stake (253.1 million shares) in Equity bank to the International Finance Corporation (IFC) netting an estimated Ksh.13.9 billion..
The shares were sold at a price of Ksh.55 each. The allocation of the proceeds into fixed income represents the firm’s ongoing efforts to reduce its investment exposure.
“We had a lot of volatility in the past. We did sell our Equity stake and what we have done is allocate those proceeds into investments in fixed income. This has reduced the level of volatility to a large extent,” said Britam Group Chief Finance Officer Charles Njuguna.
Britam has suffered swings in fair-value gains and losses on financial assets which have largely alternated year over year.
For instance, Britam booked fair value gains of Ksh.1.8 billion in 2021 to reverse a Ksh.2.5 billion loss in 2020 which was preceded by Ksh.4.8 billion gains in 2019.
In 2018, Britam booked Ksh.3 billion in fair value losses after Ksh.1.3 billion in 2017 gains.
The investments reclassification has seen Britam reduce its holding of listed equities, properties and investments in associate companies.
“The Group is already exiting some investments that have been introducing significant fair value movements in its results,” Britam said in its 2021 Annual Report.
“There is an increasing shift in investment assets from properties and equities to fixed income instruments.”
Britam has nevertheless marked paper losses from investments in government securities from shifts in the yield curve which has moved upwards across different maturities of held Treasury bonds.
Additional Source; Citizen Digital
