CMA Grants Exemption to Hubris Holdings and Sanlam Allianz Africa from Mandatory Takeover Offer Following Sanlam Kenya Rights Issue

In the world of corporate finance, certain moves stand out not just for their immediate impact but for the broader signals they send about market maturity and regulatory adaptability. One such move is the recent development involving Sanlam Kenya Plc, Hubris Holdings Limited, and Sanlam Allianz Africa Proprietary Limited (SAZ). 

On July 3, 2025, Kenya’s Capital Markets Authority (CMA) granted an important exemption to Hubris and SAZ from the mandatory takeover offer rules after their combined shareholding in Sanlam Kenya rose to 71.47%. This came on the back of a KSh 2.5 billion rights issue aimed at strengthening Sanlam Kenya’s financial footing and repaying a hefty loan.

Setting the Scene: Sanlam Kenya’s Ownership and the Rights Issue

Sanlam Kenya Plc is a key player in the Kenyan insurance and financial services sector. Before the recent capital raise, the company was majority-owned by Hubris Holdings Limited, which held 57.14% of the shares. Sanlam Allianz Africa Proprietary Limited (SAZ), a South African entity, is the parent company of Hubris Holdings and a significant institutional investor in its own right.

In early 2025, Sanlam Kenya launched a rights issue to raise KSh 2.5 billion by issuing 500 million new ordinary shares at KSh 5 each. This rights issue was structured to allow existing shareholders to purchase additional shares in proportion to their holdings—specifically, 125 new shares for every 36 shares held. Hubris Holdings took up all its entitlements, increasing its stake from 57.14% to 66.19%. Additionally, under an underwriting agreement, Hubris and/or SAZ are expected to be allotted a further 100.5 million shares, pushing their combined ownership to 71.47%.

The Regulatory Landscape: Understanding Kenya’s Takeover Rules

Kenya’s capital markets are governed by a detailed regulatory framework designed to protect investors and ensure fairness. Central to this framework are the Capital Markets (Take-overs and Mergers) Regulations, 2002, which govern changes in control of publicly listed companies.

Key Regulatory Provisions

A key provision is Regulation 3(1), which mandates that any person or group acquiring effective control of more than 35% of a company’s voting shares must make a mandatory takeover offer to the remaining shareholders. The rationale is simple: when a shareholder gains significant influence or control, minority shareholders should have the option to exit at a fair price.

The Exemption Application: Why Hubris and SAZ Asked for Relief

Given that Hubris and SAZ’s combined stake rose well above the 35% threshold to 71.47%, they were technically required to make a mandatory takeover offer to minority shareholders under Regulation 3(1). However, they applied to the CMA for an exemption based on the grounds outlined above.

Strategic and Financial Implications: What This Means for Sanlam Kenya

The rights issue and the subsequent exemption have significant strategic and financial implications for Sanlam Kenya.

1. Debt Reduction and Financial Stability

The KSh 2.5 billion raised was primarily used to repay a large portion of the KSh 4 billion loan from Stanbic Bank Kenya. This repayment reduces interest expenses and improves the company’s liquidity, freeing up resources for investment and growth.

Impact on Minority Shareholders: Balancing Interests

One of the biggest concerns in any transaction that increases majority ownership is the fate of minority shareholders. Typically, a mandatory takeover offer ensures that minority shareholders can exit at a fair price when control changes hands.

Broader Lessons for Kenya’s Capital Markets

This development offers several important lessons for Kenya’s capital markets and regulatory environment:

Conclusion: A New Chapter for Sanlam Kenya and Kenya’s Capital Markets

The CMA’s exemption for Hubris Holdings and Sanlam Allianz Africa from making a mandatory takeover offer after a substantial rights issue marks a significant milestone for Sanlam Kenya and Kenya’s capital markets. It reflects a maturing market where regulatory frameworks adapt to support corporate restructuring and growth without compromising investor protection.