Sovereign Trust Insurance was the biggest gainer on the Nigerian Stock Exchange (NSE) two weeks ago. The stock opened at N0.20 and closed at N0.26, up 30%.
The stock has also been trading unusually high volumes for a penny stock, indicating that an investor may be taking position. Over 40 million shares have been traded in the last two weeks alone. Sovereign Trust Insurance usually goes for days without a single trade.
Significant Shareholders
The company’s financial statements for the period ended December 2017, show that the following shareholders held 5% or more of the company’s issued share capital.
Morning Side Capital Partners Ltd 1,575,000,000 (18.88%)
Bayelsa State Ministry of Finance Inc. 900,000,000 (10.79%)
TEEOF Holdings Ltd 821,572,742 (9.85%)
Details from the 2016 Annual report show that Morning Side Capital Partners was not a shareholder, indicating that it acquired its stakes sometime in 2017, coinciding with TEEOF Holdings and Ephraim Faloughi selling down their stakes.
Morning Side Capital Partners is reportedly owned by ex Managing Director of Diamond Bank Plc, Alex Otti.
General Manager of the firm, Chuka Ofili, is an ex staff of Diamond Bank and was Executive Assistant to the GMD of Diamond Bank between May 2011 and May 2015.
And it gets interesting
Details from the company’s website listed Ms Omozusi Iredia as a Non Executive Director holding 392 million shares.
Iredia was the Chief Compliance Officer at Coronation Securities Limited, which is in turn owned by Coronation Merchant Bank.
The bank is in turn an associate company of Wapic Insurance Plc. Ex-MD of Access Bank Plc, Aigboje Aig-Imoukhuede, is the dominant stakeholder on the board.
It is unknown if Iredia is sitting on the board in her personal capacity or on behalf of a key investor.
Wapic Insurance had however indicated its willingness to acquire another insurance firm.
In March 2017, it sought the approval of shareholders to raise N10 billion as capital.
Wapic was also in the running to acquire Ensure Insurance which was eventually acquired by German insurance firm, Allianz.
Third angle
Some sources have suggested that a private equity firm could be involved. Nigeria’s insurance industry has seen several foreign investors take up stakes in insurance firms.
Why now?
Sovereign Trust shares are currently trading 48% below their year opening price of N0.50 per share. Insurance firms were largely affected by the minimum floor rule which saw their share price drop sharply. The relatively low price makes acquiring a stake much cheaper.
About Sovereign Trust Insurance
The Company was incorporated as a limited liability company on 26 February,1980 and commenced business on 2 January, 1995 as a non-life insurer with an authorized share capital of ₦30 million and a fully paid up share capital of ₦20 million following the acquisition and recapitalisation of the then Grand Union Assurance Limited.
The Company which was licensed to carry out business in all classes of Non-Life insurance and as special risk insurer currently has authorized share capital of ₦5.25 billion divided into 10.5 billion units of 50 kobo per share with a paid up capital of ₦4.1 billion divided into 8.3 billion units of 50 kobo per share.
The Company became a Public Limited Company (PLC) on 7 April, 2004, and was listed on the Nigerian Stock Exchange on 29 November 2006.
Update: We have since been notified that Ms Omozusi Iredia has since left Coronation Securities Limited. The Sovereign Trust Insurance website still reflects this information, as with her Facebook page. Her Linkedin page does not make mention of her current position.
Details from the 2016 Annual report show that Morning Side Capital Partners was not a shareholder, Seems they bought during the right offer, https://nairametrics.com/sovereign-trust-insurance-obtains-shareholder-approval-to-raise-fresh-capital/