Listed financial services group Sanlam Kenya Plc is navigating a significant corporate restructuring after it recently completed a KES 2.5 billion rights issue which has reshaped its shareholding structure.
- •Its parent organisation Hubris Holdings Limited (Hubris) has now increased its stake from 57.14% to 66.19% as a result of the rights issue.
- •The shareholding could rise to 71.47% following an underwriting deal with Sanlam Allianz Africa Proprietary Limited (SAZ).
This transaction triggered Kenya’s Capital Markets (Take-overs and Mergers) Regulations, 2002 specifically on the issue of a mandatory take-over offer and the company’s request for an exemption.
According to the Sanlam Kenya Cautionary Announcement dated 9 June 2025:
- •Hubris subscribed to all its entitlements, raising its shareholding to 66.19%.
- •A further allotment of 100,579,535 shares is expected to Hubris and/or SAZ under the underwriting agreement. This would increase their combined shareholding to 71.47%.
“The Transactions trigger the provisions of regulations 3(1) and 4 of The Capital Markets (Take-overs and Mergers) Regulations, 2002 under which Hubris and SAZ will be deemed as having acquired effective control of Sanlam Kenya.”
The Law: Mandatory Take-Over Offer
Kenya’s Capital Markets (Take-overs and Mergers) Regulations, 2002, under the Capital Markets Act (Cap 485A), regulate control changes in listed companies.
Regulation 3(1) states:
“Subject to regulation 5, any person who acquires effective control of a company shall make a take-over offer to all the remaining shareholders of that company.”
Regulation 4(1) defines effective control as:
“…a person acquires or intends to acquire shares which, together with shares already held by him or by persons acting in concert with him, carry thirty-five per cent or more of the voting rights of that company.”
Hubris and SAZ now hold more than 35%—specifically over 50%. Therefore, they are deemed to have acquired effective control and are required to make a take-over offer to the remaining shareholders.
The Exemption Application
Despite this requirement, both the Sanlam Kenya Cautionary Announcement and the Notice of Intention NOT to Make a Mandatory Take-Over Offer confirm that Hubris and SAZ applied for an exemption.
Specifically:
“Hubris and SAZ… have applied to the CMA for an exemption under regulations 5(2)(a); 5(2)(f) and 5(2)(g) of the Take-over Regulations.”
— Sanlam Kenya Notice of Intention NOT to Make a Mandatory Take-Over Offer
Regulation 5(2) states:
“The Authority may, upon application by the offeror, exempt an offeror from making a take-over offer under regulation 3(1) if—
(a) the acquisition of effective control is as a result of a rights issue or a rescue operation involving a company in financial difficulty;
(f) the Authority considers that compliance with regulation 3(1) would not be equitable or would be unduly burdensome or impracticable having regard to the circumstances;
(g) the Authority considers that compliance with regulation 3(1) would not be in the best interests of the shareholders of the offeree company.”
Hubris and SAZ argue that their increased stake arose from the rights issue which had CMA and Insurance Regulatory Authority (IRA) approval. They also emphasize that the transaction aimed to strengthen Sanlam Kenya’s balance sheet by repaying a KES 4 billion loan owed to Stanbic Bank Kenya Plc.
“SAZ has actively supported and facilitated the settlement of the Stanbic Loan through its participation in and underwriting of the Rights Issue, thereby assisting the SKP group to position itself for expansion which is expected to provide broader benefits to the insurance market in Kenya.”
— Sanlam Kenya Notice of Intention NOT to Make a Mandatory Take-Over Offer
Now, the CMA must decide:
- •Whether the circumstances fit the exemptions under Regulation 5(2).
- •Whether the rights issue and underwriting arrangement qualify for exemption.
- •Whether shareholders would be treated fairly without a mandatory offer.
If the CMA grants the exemption, Hubris and SAZ will not need to make a take-over offer. However, if the exemption is denied, they must proceed with a mandatory offer to all shareholders under Regulation 3(1).