Ghana Re to recapitalise to Gh¢380m
The Ghana Reinsurance Company Limited (Ghana Re) is to raise its stated capital from GH¢70 million to GH¢380 million by the end of the year in a move intended to inject fresh capital into the operations of the company.
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The Managing Director of the company, Mr Gustav Siale, told the GRAPHIC BUSINESS on June 11 that the extra funds were to be raised through private placement, mostly from state-owned enterprises.
“The placement will also be opened to Ghanaian-owned private companies and investors,” he added.
Reasons for recapitalisation
The MD explained that the company was now working at securing the services of a transaction advisor to guide it and its sole shareholder, the government, to begin the recapitalisation process.
Already, Mr Siale said, the government had given the company the green light after admitting that the company needed to increase its capital base to be able to take up bigger transactions as well as deepen its operations in foreign markets.
He was thus confident the new capital would help prepare the company for its expansion into the African continent, which it had been working on for some years.
“We want to go into other markets in Africa and with those additional financial resources at our disposal, we believe strongly that it will help us to be able to grow the company further,” he said.
A source told the paper in confidence that the recapitalisation was to help diversify the ownership of the company.
“I think government has seen the need to diversify the ownership and that is why it is opening up this recapitalisation to private investors.”
“But in doing that it will first give it to Ghanaians before thinking of foreigners,” the source said.
Impact of performance on US$100m
Ghana Re, which is a state-owned enterprise (SOE), has been in operation since 1984 after it was plucked out of the then State Insurance Company Limited to become a separate entity.
It was subsequently incorporated in 1995 as a state insurer with a mandate to reinsure the businesses of virtually all insurance businesses in the country.
Initially as the sole operator in the burgeoning reinsurance industry, Ghana Re enjoyed monopoly, albeit suffering the menace of capital flight, until the entry of Mainstream Re and GN Re in recent years.
Last year, the company’s net profit declined by 33.39 per cent after falling from GH¢43.03 million in 2014 to GH¢28.66 million last year.
The decline was in spite of a 20.3 per cent growth in gross premium which was blamed largely on the June 3 disaster, which cost the company some GH¢43 million in claims.
As a result of the dull performance for last year, the source wondered if the desire to recapitalise to GH¢380 million would materialise, given that it would be based on the value of the company.
“At the time we started the process, the company was valued at GH¢380 million (US$100 million) but I do not know if it still has that same value,” the source said.
The transaction advisor is, therefore, expected to help ascertain the value of the company to ensure that Ghana Re, the government and interested investors get value for money when the private placement finally begins.
