Shareholders of mortgage lender Housing Finance Company of Kenya Limited (HF) have approved a change of name for the company to Housing Finance Group.
The wholly owned subsidiary Housing Finance Company will take over the mortgage business while the non-operating holding company will be Housing Finance Group. At its Extra-ordinary General Meeting at the Kenyatta International Convention Centre (KICC), shareholders approved formation of the holding company. It expects to complete transactions before end of this month.
A holding firm is a special type of business that doesn’t do anything itself. Instead, it owns investments, such as stocks, bonds, mutual funds, gold, silver, real estate, art, patents, copyrights, licenses, private businesses, or virtually anything of value.
The board resolved that upon and subject to completion of the transfer, that the company becomes a non-operating holding company in terms of Section 13(1)(e) of the Banking Act, which will own the wholly-owned subsidiary as well as all other subsidiaries and shareholding investments of the company.
Housing Finance Chairman Steve Mainda said under its current structure, the company is subject to regulatory constraints that limit its ability to invest in subsidiary companies and new business.
“This means we cannot take advantage of the some of the growth opportunities available,” he added. The Banking Act prohibits HF as a mortgage firm from lending to non-regulated subsidiaries or engaging directly in wholesale and retail trade except in satisfaction of debt due to it. It cannot also inject more than 25 per cent of its core capital into its non-mortgage finance subsidiaries.
Rights issue
The firm’s shareholders also agreed that upon receiving all regulatory approvals, including that of the Capital Markets Authority, the firm will have a rights issue at a date and price to be fixed by the board.
The board will also be empowered to dispose of all the shares not taken up during the rights issue and paid for in full by any shareholder within the given timelines.
The move by HF to create a non-operating holding company comes after Equity Bank last month sought shareholders’ sanction to create a holding company to oversee all the subsidiary’s operations.
Equity is awaiting Central Bank and Capital Markets Authority approvals to sell a 24.7 per cent stake it holds in HF to Britam for an estimated Sh2.2 billion, having already received the Competition watchdog’s approval.
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