Emerging Capital May Sell Stake in Nigeria’s Continental Re

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Emerging Capital Partners, a private-equity firm that has raised more than $2 billion for investments in Africa, is considering selling its majority stake in Nigeria’s Continental Reinsurance Plc.

The buyout firm’s Africa Fund II is “exploring” the sale of C-Re Holding Ltd., which owns about 50.6 percent of the Lagos-based reinsurer, Continental Re said today in a filing to the Nigerian Stock Exchange. Emerging Capital bought a 30 percent stake in the reinsurer for $25.8 million in 2007, according to the Washington-based private-equity firm’s website.

Calls to the offices of Emerging Capital in Washington and Lagos weren’t answered. An exit by the private-equity firm won’t affect Continental Re’s business, Managing Director Femi Oyetunji said today.

Continental Re shares fell 4.3 percent to close at 1.12 naira [$.0069] in Lagos trading. The stock has declined 8.9 percent this year compared with a 4 percent gain by the 195-member Nigerian Stock Exchange All Share Index.

Continental Re plans to raise capital this year as the reinsurer sets up operations in more African markets, Oyetunji said in a July 14 interview. The reinsurer, which has branches in Cameroon, Ivory Coast, Kenya and Tunisia, plans to open in Botswana this year and may expand into South Africa and Angola over the next three years, he said.

Untapped Market
“The amount will be significant and more likely to be equity,” Oyetunji said at the company’s headquarters in Lagos, Nigeria’s commercial capital. “The rest of Africa is also a largely untapped market for us.”

The company needs the capital to “diversify and deepen its operations” and write more risks covering life, property, engineering, oil and gas insurance, he said.

Nigeria’s regulator oversaw industry reform after the global financial crisis brought the banking industry and stock market in Africa’s biggest oil producer to the verge of collapse in 2009. Rules that force Nigerian companies with at least five workers to take life cover and make property insurance mandatory are improving cash flow for the insurance and reinsurance industry, Oyetunji said.

“Once the statistics makes sense, it’s something we’ll do,” said Oyetunji, commenting on the company’s planned expansion into South Africa and Angola.

The company, which writes reinsurance risks in 50 nations on the continent, plans to increase the share of revenue generated by operations outside Nigeria to 60 percent by 2017 from 35 percent last year, he said. It boosted gross premiums by 8.7 percent to 15 billion naira ($92.5 million) last year, according to July 7 filing to the Nigerian Stock Exchange.

Continental Reinsurance expects profit to climb by “at least 20 percent” this year from 1.8 billion naira in 2013 with premiums gaining 25 percent, Oyetunji said.