AA of Kenya restructures for the future

The Automobile Association of Kenya (AAK) is over a century old and a member of the  International Automobile Federation (FIA). It is known for roadside assistance, its driving schools, setting mileage rates, Autonews magazine, car valuations for banks and vehicle inspections. It is also the go-to place for the issuance of international driving licenses, and carnets which are passports for cars to travel across borders e.g to Tanzania, Uganda or for other trips like this bike ride to South Africa.

Before you go on one of these trips, make it easy for yourself and get the following:
Carnet de Passage for each vehicle (get this via AA)
COMESA insurance (get via your insurance company, or buy at the border)
International driver’s license (get via AA)

The AAK had 2019 revenue of Kshs 722 million, expenses of Kshs 643 million and profit of Kshs 79 million. In Covid-affected 2020, revenue dipped to Kshs 472 million, and its net profit was 11 million. It had 100,000 members and net assets of Kshs 252 million.

While other automobile associations around the world do things like operate hotels & petrol stations and do helicopter rescues, the AAK plans its future revenue diversification ventures to include:

  • Establishing service centres in Nairobi, Mombasa, Kisumu, Eldoret and Nakuru.
  • Establish a learning centre called the Africa School of Mobility.
  • Be a leader in innovating mobility products and lead in green technology research.
  • Expand to all 47 counties and later to Rwanda and Ethiopia.

The envisioned projects all take capital so, at a special meeting in October 2021, AAK members voted to demutualise from being an association under the Societies Act and convert to a public limited company (PLC). They overwhelmingly passed proposals, with support ranging from 88% to 99%, including 93% for the AAK to do the demutualization and capital raising project.

The process will see the transfer of assets and investments to Automobile Association PLC, a holding company which will raise capital through a restricted public offer that is open to a new class of “full members.” The company will have an insurance brokerage as a subsidiary and an AA institute as an affiliate.

Currently, AAK members enjoy discounts on petrol (at Total stations), batteries, tyres, shock absorbers, and other services from partner organizations. But in future, “full members” will get shares, voting rights, more discounts on products and services that the AAK will continue to offer, in addition to dividends in future as shareholders. The AAK has also joined the Nairobi Securities Exchange (NSE) Ibuka accelerator program.

One can now enroll for full membership by paying a one-off fee of Kshs. 50,000 through card, M-pesa or deposit at the Cooperative Bank before December 31, 2021. This has been discounted to Kshs 40,000 for anyone who was an ordinary member of the AAK before the meeting date of 19 October. AAK transaction advisors are Standard Investment Bank, MMC Asafo and Tim Sky Media.

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