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HF shareholders approve move to raise more cash

BUSINESS
By By James Anyanzwa | April 27th 2014

By James Anyanzwa

Housing Finance (HF) plans to raise additional capital from existing shareholders to fund its ambitious growth and expansion strategy.

This follows shareholders approval of the mortgage lender’s resolution to increase its authorised share capital by an additional 265 million shares.

Under the plan, the housing financier’s authorised share capital will increase to 500 million shares, from the current 235 million shares. Managing Director Frank Ireri said the rights issue could be executed next year to give the shareholders an opportunity to increase their stake in the company.

“These new shares will not be used this year. We are just preparing ourselves so that we may do a right issue earliest by next year or 2016,” Ireri told reporters shortly after the company’s Annual General Meeting in Nairobi yesterday.

The firm’s capital base currently stands at Sh6 billion, including reserves. In 2008, HF raised Sh2.3 billion through a rights issue, which was oversubscribed by three per cent.

The firm    issued 115 million new ordinary shares as rights to existing shareholders through the NSE and managed to raise Sh2.37 billion. Equity Bank which holds 24.78 per cent shareholding in the mortgage lender. Equity Nominees Ltd and Britam (K) Ltd own 10.11 per cent and 8.84 per stake respectively.

National Treasury and NSSF control 3.65 per cent and 6.8 per cent shareholding respectively in HF.  HF’s pre-tax profit for the three-months period to March 31 climbed 13 per cent, boosted by additional revenues from the firm’s diversified investment basket, including forex trading.

Its profit before tax grew to Sh315.97 million from Sh279.9 million in a similar period last year. Forex trading whose operations were launched in June last year, yielded Sh13.68 million. The firm is also set to bolster its diversification process by tapping into the more vibrant retail sector. “Housing Finance main focus now is to grow new deposits in current and savings account which will reduce our cost of funds and also improve our bottom line,” said Ireri. HF has also embraced Joint ventures in the supply of affordable housing units. Under the plan, HF seeks to explore partnerships, collaborations and joint ventures with landowners to develop housing units.

The plan, which began in 2012, targets mainly the middle and lower-middle income earners. The firm recently introduced Ezesha product that provides up to 105 per cent of the property value.

This is expected to increase the uptake of mortgages in the middle to lower end of the market, which is largely untapped.

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