Duncan to sell United Insurance, United Finance shares to local entrepreneurs

The British-based conglomerate Duncan Brothers and its associates 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 "prominent business conglomerate" has signed two share purchase agreements to acquire these shares. 

However, the local conglomerate's partners have requested The Business Standard to withhold their names until they receive final approval from the relevant authorities.

A director of the conglomerate said, "If our names are disclosed, the share prices of the two companies may be affected, which could potentially disrupt our deals."

Despite several attempts to contact Duncan Brothers Executive Chairman Imran Ahmed for comments on the reasons behind the group's decision to sell its shares, he did not respond to calls.

However, an official from Duncan Brothers, speaking on condition of anonymity, explained that the business environment for insurance and non-bank financial institutions (NBFIs) has deteriorated in recent years. 

The official noted that the country has an oversupply of insurance companies and NBFIs, and that public confidence in the sector has waned due to various irregularities. 

"As a result, Duncan Brothers has been seeking to divest from these sectors for several years," added the official.

Currently, the country has 34 NBFIs, and 46 non-life insurance companies.

On 29 October, the boards of directors of United Finance and United Insurance, representing Duncan Brothers and its associates, decided to sell their entire holdings in both companies. 

Following the decision, share purchase agreements were signed with local entrepreneurs on 30 October, according to statements obtained and reviewed by The Business Standard.

The statement further said the execution of the share trade, the purchasers will be eligible to become directors of the United Finance and United Insurance subject to approval of regulators.

According to the shareholding reports of United Finance and United Insurance, Duncan Brothers - a subsidiary of the British-based Camellia Group - and its associates, including Lawrie Group, hold 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 traded 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 approximately 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 transitions, and mergers, before ultimately becoming part of the Lawrie Group Plc and, eventually, Camellia Plc. 

Tea remained its core business until 1985, when the company began diversifying by establishing United Insurance and United Finance. 

United Insurance, a general insurer, paid a 10% cash dividend to its shareholders for the last year, while it posted a net profit of Tk7.91 crore.

Besides, United Finance paid a 6% cash dividend in the year of 2023, while it reported Tk14 crore in that year.