Housing Finance plans cash call in early 2015

Housing Finace CEO Frank Ireri reads 907 million full year pofit report at the Serena hotel. [PHOTO BY MOSES OMUSULA/STANDARD]

Kenya: Housing Finance will raise cash with a rights issue in the first months of 2015, it said yesterday, months after it scrapped a planned Sh20 billion ($222.22 million) bond due to high interest rates.

Housing Finance, the only listed dedicated mortgage financier in East Africa’s largest economy, did not detail the size of the capital raising or what it would use the cash for.

Kenya needs 210,000 new housing units a year, well above the 50,000 houses actually built, according to a study by the country’s central bank and the World Bank. Several banks have been seeking funds to expand lending to mortgage seekers.

Frank Ireri, HF’s chief executive, said shareholders would vote on the capital increase on December 5, though the timing of the cash call itself would depend on regulatory approvals.

“For us, the sooner the better, so our hope is that we will be able to (go ahead) in the first quarter 2015,” he said.

Housing Finance also plans to create a holding company to allow subsidiaries to operate independently, following a trend seen elsewhere in Kenya. Apart from lending to home owners and developers, the firm runs an insurance agency and a property development arm.

Kenyan banking laws do not allow banks to lend to non-banking subsidiaries, or to inject more than a quarter of their core capital into non-banking subsidiaries.

Faith Mwangi, research analyst at Standard Investment Bank, said a holding structure would help banks provide capital to their subsidiaries, while keeping to regulatory constraints.