- Britam Holdings, a prominent player in Kenya's financial sector, has made a strategic decision to halt its investments in equities amid the downturn in share prices at the Nairobi Securities Exchange (NSE).
- In terms of financial performance, Britam's fair value losses from equities and government securities decreased to Sh1.8 billion in the first half of this year, down from Sh2.3 billion.
Britam Holdings, a prominent player in Kenya's financial sector, has made a strategic decision to halt its investments in equities amid the downturn in share prices at the Nairobi Securities Exchange (NSE).
This shift in investment strategy has been prompted by a substantial drop in the value of many companies' shares within the NSE.
As the NSE experienced a 22 per cent decline, equivalent to Sh441 billion in the first eight months of this year, Britam Holdings has reevaluated its approach.
Instead of channelling funds into equities, the company is now focusing more on treasury bills and bonds, where returns have shown a positive trajectory in recent months.
Britam's Chief Executive, Tom Gitogo, explained the rationale behind this strategic position, stating, "We have not made additional investments on the stock exchange, and that will remain the case for the foreseeable future. We have looked for other avenues for our investment, and that strategy is bearing fruits."
Gitogo emphasized that the decision to refrain from further investments in equities was made with a clear strategy in mind. He acknowledged the current challenges in the NSE.
"Britam will, not without a strategy, invest in the NSE. Even our own stock at about Sh5 is a significant discount on the true value."
This move by Britam Holdings aligns with the broader context of falling equities prices in the Kenyan market, exacerbated by a weaker Kenyan shilling against the dollar.
Foreign investors have been fleeing, seeking better returns in developed markets, particularly in the United States, where interest rates have been on the rise.
Reflecting the impact of these decisions, Britam's stake in quoted ordinary shares dropped from 6 per cent in 2020 to 2.9 per cent in March of this year.
This significant reduction is attributed to the devaluation of stocks and subsequent sell-offs in response to market conditions.
In terms of financial performance, Britam's fair value losses from equities and government securities decreased to Sh1.8 billion in the first half of this year, down from Sh2.3 billion.
This improvement can be attributed to the decision to avoid additional equities investments and the marking of bonds to market value.
Gitogo further elaborated on their investment strategy, stating, "We took time to structure our investment portfolio, and we are more efficient at matching our long-term insurance liabilities with bonds that are held to maturity."
Notably, last year, Britam Holdings successfully concluded the sale of its 6.7 per cent stake in Equity Group to the International Finance Corporation, generating approximately Sh13.9 billion in proceeds.
Britam Holdings' strategic shift away from equities towards treasury bills and bonds reflects a proactive response to the challenging market conditions at the Nairobi Securities Exchange.
This move underscores the company's commitment to safeguarding its investments and pursuing avenues that offer more favourable returns in the developing financial landscape.