JOHANNESBURG (Reuters) – South Africa’s Liberty Holdings has bought a controlling stake in a short-term insurer in Uganda for an undisclosed sum, pursuing its strategy of expanding on the African continent.
The deal gives Liberty a 51-percent stake in Madhvani Group’s short-term insurer, East African Underwriters Ltd (EAUL).
EAUL provides insurance services to industries, manufacturers and professionals, ranging from corporate liability to personal lines such as motor or home cover.
Liberty, South Africa’s number four insurance firm by market value, is expanding beyond its home base to parts of Africa, where demand is rising from a growing middle class.
The acquisition will bulk up Liberty’s position in the East African market, where it already has a presence in Kenya and Tanzania.
The deal would help offset weak demand at home where economic growth continue to be strained by high unemployment rate, rising food and the interest rates. The IMF has forecast economic growth of 5 percent in Uganda for fiscal 2015-2016.
Shares in Liberty rose much 5 percent shortly after the news, before paring gains to trade 2.2 percent higher at 112.41 rand as of 1050 GMT.
Liberty, a unit of Africa’s second-biggest bank by value Standard Bank , also said it has been granted license to operate in Lesotho.
Liberty is due to report its annual results next month.
($1 = 16.0665 rand)
(Reporting by Thekiso Anthony Lefifi; Editing by Tiisetso Motsoeneng and Keith Weir)