Yes, by now if you are a regular reader of this blog, you will have known how impressive our results are so I will not belabour that point. British American judging by last year’s impressive results, it is a good buy. But investors are a futuristic lot by nature and are bound to ask, how does the future of the company look ?
My crystal ball is not working so i will answer that question using facts and other fundamentals. The future looks as bright as an BMW X6 full headlights (they totally can blind you if ur driving the opposite way). Why you may ask? The company’s main businesses are in insurance and asset management. Let us break them down in terms of potential for growth:
Opportunities in Insurance: KSh1 billion of the IPO money will be used to expand insurance in Kenya and other new markets like Tanzania, Rwanda and South Sudan. Already, we have a subsidiary in Uganda. Folks these countries present a huge potential for growth. Insurance penetration in Uganda remains the lowest in the East African region at only 0.6% when compared to Kenya’s 2.6%, and Tanzania and Rwanda’s 1% respectively. What if we manage to raise this penetration to 14% like South Africa’s or even Malaysia’s 10%? This would mean more business for British America, rising share price for us and a happy East Africa.
Asset management: There are only 8,000 clients in Kenya who have signed up for asset management. And even with those , 32% of them are with British American Asset Managers . Yes, we are market leaders already and we have not began to scratch the surface. Kenya has the largest middle class with estimates that around four million out of 40 million Kenyans are in the middle class. Now, what if we could get half of them to buy unit trusts and other instruments in asset management? And that is just Kenya.
Property development: Do you know Kenya needs 150,000 housing units but only 35,000 are provided yearly? We will be investing in this sector and Ksh2.5billion of the monies raised will go to property development including homes, office space and other unique developments. You never know, you can buy the IPO and kiss (or smack) your landlord goodbye at the same time, all courtesy of British American. This sector has superb consistent returns ranging from 7% in residential to 13% industrial rents. Beat that!
Growing Economies: Remember the economies of these countries are projected to grow this year. Uganda and Kenya are projected to grow by over 6% while Kenya’s projection ranges between 6-7%. Also, Uganda and South Sudan are going to start drilling oil soon raising their growth prospects even further. Mmmhhh.
Invest in today and the future. Buy the British American IPO now. You have one more day.