United Group founders enter NBFI, insurance sectors by acquiring Duncan's firms

United Group entrepreneurs have ventured into the non-bank financial and insurance sectors with a Tk173.85 crore acquisition of Duncan Brothers and its associates' stakes in United Finance and United Insurance.

On 10 November, United Group acquired 6.53 crore shares of United Finance for Tk89.75 crore, followed by the purchase of 2.37 crore shares of United Insurance for Tk84.10 crore on 11 November. 

Both transactions were made through the block market on the Dhaka Stock Exchange (DSE) from Duncan Brothers and its associates, according to the Dhaka bourse.

DSE data shows that United Group founders Hasan Mahmood Raja, Akhter Mahmud Rana, and Khandaker Moinul Ahsan Shamim, along with their family members, acquired United Finance shares at prices ranging from Tk13.70 to Tk14.30 each and United Insurance shares at Tk35.50 each.

They established the United Group in 1978, which engaged in various sectors including power, real estate, retail and service, healthcare, manufacturing, education and port, terminal and shipping. These entrepreneurs own United Power listed on the stock exchanges.

Khandaker Moinul Ahsan Shamim, founding director of United Group, told The Business Standard, "We are proud to join the legacy of trusted, sustainable financial institutions. Under current turbulent times, this move instills further confidence."

"This acquisition underscores our commitment to strengthening the economy. Investing in a challenging market reaffirms our confidence in the company's potential and our dedication to the nation's progress," he added.

On Monday, United Finance shares closed at Tk15.60, lowering 1.27% from the previous session. However, United Insurance shares rose 4.57% to reach Tk41.20.

The new owners of United Insurance acquired its shares at a 14% discount to the current market price, while the United Finance shares were purchased at a 10% discount.

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, held 34.91%, or 6.53 crore shares, in United Finance, and 53.23%, or 2.36 crore shares, in United Insurance.

At the end of October, the British-based conglomerate Duncan Brothers and its associates decided to divest their investments in United Insurance and United Finance by selling their stakes in both companies.

Following the decision, share purchase agreements were signed with United Group entrepreneurs on 30 October, according to documents seen by The Business Standard.

Under the agreements, Ahsan Shamim, Akhter Mahmud, Nizamuddin Hasan Rashid, Sharfuddin Akhter Rashid, and Khondakar Zahin Ahsan will hold directorial positions in United Insurance.

Meanwhile, Kayes Khalil Khan, Moinuddin Hasan Rashid, Mahenoor Sultana Rashid, Nazmul Hasan, Kutubuddin Akhter Rashid, and Khondaker Zayed Ahsan will serve as directors of United Finance.

An official from Duncan Brothers, on condition of anonymity, explained that the business environment for insurance and NBFIs has deteriorated in recent years.

The official said 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.

From Tea Legacy to Financial Sector Expansion

Duncan Brothers was established 150 years ago, at a time when the tea industry was just beginning to take off. As a result, the company naturally shifted its focus to tea.

Over the next 150 years, Duncan Brothers experienced several changes, including shifts in partnerships, ownership transitions, and mergers. Ultimately, it became part of the Lawrie Group PLC and, later, Camellia PLC.

In 1985, the company diversified by founding United Insurance and United Finance.

United Insurance, a general insurer, paid a 10% cash dividend to its shareholders last year, reporting a net profit of Tk7.91 crore. By the end of the first nine months of this year, its net profit stood at Tk6.87 crore, with earnings per share of Tk1.55.

United Finance, on the other hand, paid a 6% cash dividend in 2023, with a reported net profit of Tk14 crore for the year. At the close of last year, its total classified loan amounted to Tk98.59 crore, representing 4.80% of its total disbursement. 

For the January-September period of this year, United Finance reported a net profit of Tk4 crore, with earnings per share of Tk0.22.