Old Mutual Plc, the U.K.’s third-largest insurer, said it plans to buy a controlling stake in Kenyan lender Faulu Kenya DTM Ltd. to tap growth in Africa.
The acquisition of the first deposit-taking microfinance company to be licensed by the Central Bank of Kenya is expected to be completed this year, London-based Old Mutual said in a statement today. While the price wasn’t disclosed, the insurer said the purchase was part of the 5 billion rand ($497 million) set aside in March for expansion in Africa.
“We are building on our existing business in Kenya with a significant extension of our distribution and product offering through this transaction,” Old Mutual Chief Executive Officer Julian Roberts said in the statement. “This is a further step in executing our strategy of expanding our African footprint.”
Old Mutual, which started in South Africa more than 100 years ago, is building its operations on the continent as emerging markets contribute the bulk of the insurer’s earnings. Faulu is East Africa’s second-largest microfinance company with more than 400,000 customers and 100 outlets, Old Mutual said.
Old Mutual dropped 2.9 percent to 178.9 pence as of 12:05 p.m. in London compared with a 1.5 percent decline in the 28-member Bloomberg Europe 500 Insurance Index.