April 20, 2011 / 9:19 AM / 9 years ago

Kenya's Jubilee to spend $40 mln on expansion

NAIROBI (Reuters) - Kenya’s Jubilee Holdings plans to invest $40 million by the end of 2012 to fund an expansion across Africa over the next two years, its Chairman said on Wednesday.

Nizar Juma told Reuters the Nairobi-listed insurance company, which launched operations in Mauritius and Burundi earlier this year, would aim to move into at least two more markets in 2011 and at least another two next year.

Jubilee Holdings already operates in Kenya, Uganda and Tanzania but is seeking to tap new markets across the continent.

“We are looking at seven markets actively at the moment. The seven are in east, central and west Africa, but we are also looking at north Africa,” Juma said in an interview.

“The capital requirements are between $4-5 million in each new market. That is (approximately) $40 million because it just doesn’t finish with the capital requirement.”

From motor insurance to health cover, insurance providers and private equity groups see huge potential in the rapidly expanding sector, especially among the continent’s fast emerging middle class.

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Juma expects the company to recover its new investments within the first two to three years of operation and hopes its links with the Aga Khan Development Network — a grouping of private development agencies — to smooth entry.

“Fortunately, as a part of the Aga Khan Development Network there are already other Aga Khan businesses existing in some of these countries. That makes our job easier,” said Juma.

Included among the countries Jubilee Holdings is considering are Rwanda, Southern Sudan, Egypt and Ivory Coast.

“We are looking closely at two markets in North Africa and some of the markets in West Africa,” said Juma, adding that Jubilee was keen to start companies from scratch rather than acquire existing ones.

Jubilee expects profit to grow by at least 35 percent in 2011 with a focus on the personal insurance market.

“In the last six years we have grown by an average of 35 percent each year. We would certainly not grow less than that this year,” said Juma.

“We are always looking at areas which will open mass markets for us.”

Juma said the insurance regulator’s move to increase the minimum capital base for insurers was a late move and it should consider allowing bank assurance in Kenya, which accounts for 70 percent of Jubilee’s revenue.

“It is important that regulators and government agree to bank assurance, because its from this that we will be able to get volume penetration of the market,” said Juma.

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