This involves the privatization of the state-owned corporation whereby the Government intends to offload 40 percent of its shares in the reinsurer at the Nairobi Stock Exchange (NSE) after an initial sale of 49 per cent stake to a strategic investor in 2002 foundered on valuation disputes.

Statistics:

Following the initial IPO failure, Kenya Re has rationalized its holdings in land and other properties, with their share of total investments falling from 70 per cent to 48 per cent. Proceeds from the asset sales have been channeled to liquid investments like government bonds, equity and long term deposits.

Asset value:

For the year to June 2005, the company’s investment assets were valued at KSh 7.8 billion ($106.85 million) compared with KSh 6.4 billion ($87.67 million) in 2002.

Shareholders’ equity:

Shareholders’ equity, on paper an indication of the company’s worth, has grown from KSh 4.2 billion ($57.53 million) in 2002 to KSh 5.7 billion ($78.08 million) over the period.

Net profit:

The Net Profit also surged from KSh 252 million ($3.45 million) in 2002 to KSh 469 million ($ 6.42 million), reflecting business growth and increased efficiency in the company’s operations.

Dividends:

The company paid the government, its sole shareholder, KSh 150 million ($ 2.05 million) in dividends for the year 2005.

Controversy - Advisory Bids:
 
The Government is at present receiving and evaluating bids for advisory services for the privatization contract. Kenya has lately witnessed an unprecedented scramble for these contracts that has seen firms resorting to unorthodox bidding procedures, including putting zero bids.

In fact at the moment, the sale of 40 percent of the Kenya government holding in the corporation risks being delayed by a consortium that lost the bid to advise the government on the initial public offer.

The legal element is not the only advisory role that has raised eyebrows in Kenya Re’s second attempt at privatization. Lowe Scanad won the public relations and advertising function on a technicality after a bid by its rival – Ogilvy Worldwide – was deemed unresponsive.

Lowe Scanad had also quoted to supply the services for free – zero bid – continuing a trend in recent IPOs where bidders undercut each other to unsound levels.

The sponsoring broker was also won by a consortium involving Standard Investment Bank and CFC Financial Services that quoted 5 cents (0.068 US cents) – a price that cannot buy anything in Kenya today – despite a requirement that proceeds of the sponsoring broker be shared between co-sponsoring brokers.