British conglomerate Duncan Brothers and its partners have decided to divest their investments in United Insurance and United Finance by selling their stakes in both companies.
Several sources at Duncan Brothers (Bangladesh) Limited have confirmed that a group of local entrepreneurs from a “leading business conglomerate” have signed two share purchase agreements to acquire these shares.
However, the local conglomerate’s partners have requested The Business Standard to keep their names confidential until they receive final approval from the relevant authorities.
Stay informed and follow The Business Standard’s Google news channel
An executive at the conglomerate said: “If our names are revealed, the stock prices of the two companies could be affected, potentially disrupting our deals.”
Despite several attempts to contact Imran Ahmed, executive chairman of Duncan Brothers, for comment on the reasons behind the group’s decision to sell its shares, he did not respond to calls.
However, a Duncan Brothers official, on condition of anonymity, explained that the business environment for insurance and non-banking financial institutions (NBFIs) has deteriorated in recent years.
The official noted that the country has an oversupply of insurance companies and NBFIs, and public confidence in the sector has declined due to several irregularities.
“As a result, Duncan Brothers has been trying to divest from these sectors for years,” the official added.
The country currently has 34 NBFIs and 46 non-life insurers.
On October 29, the boards of directors of United Finance and United Insurance, representing Duncan Brothers and its associates, decided to sell their entire stake in both companies.
Following the decision, share purchase agreements were signed with local entrepreneurs on October 30, according to statements obtained and reviewed by The Business Standard.
The statement further said that following the execution of the share trade, the buyers will be eligible to become directors of United Finance and United Insurance, subject to regulatory approval.
According to United Finance and United Insurance shareholder reports, Duncan Brothers – a subsidiary of Britain’s Camellia Group – and its associates, including Lawrie Group, own 34.91%, or 6.53 crore shares, in United Finance, and 53.23% , or 2.36 crore shares in United Insurance.
As of Thursday, United Insurance shares were trading at Tk41.70, while United Finance shares were priced at Tk15.70 on the Dhaka Stock Exchange.
Based on these prices, the estimated value of the deal would be around Tk200 crore.
Duncan Brothers was founded 150 years ago, at a time when the tea industry was just beginning to flourish. Naturally, the company shifted its focus to tea.
Over the next century and a half, Duncan Brothers underwent numerous changes, including shifts in partnership, ownership changes and mergers, before eventually becoming part of the Lawrie Group Plc and ultimately Camellia Plc.
Tea remained its core business until 1985, when the company began to diversify through the creation of United Insurance and United Finance.
United Insurance, a general insurer, paid a 10% cash dividend to its shareholders last year while posting a net profit of Tk7.91 crore.
Moreover, United Finance paid a cash dividend of 6% in the year 2023, while it reported Tk14 crore in that year.