Mortgage lender HF Group has formally started the hunt for a strategic investor after it invited suitors to place their bids.
HF Group chief executive Robert Kibaara said Thursday the Nairobi Securities Exchange (NSE) listed financier had launched the search for a strategic investor in a regulatory filing to shareholders.
“HF Group Plc has commenced the process of inviting strategic investors to acquire a stake in the Company as disclosed in the published 2020 financial statements. The aim of the proposed transaction is to strengthen the Group’s capital in line with the Group’s current strategic direction. This process is ongoing and as at the date of this announcement no formal transaction has been concretized.” HF Group chief executive Robert Kibaara
He however did not divulge additional details on the sale transaction including the size of the stake it is willing to dispose of.
“when a transaction materialises, details of that transaction will be announced to shareholders in compliance with the listing rules and Capital Market Authority regulations applicable to it,” he said.
Britam’s Investment in HF Group Plc
The capital allocation was to enable Housing Finance to develop its strategy of expanding into mainstream banking including retail and SME lending while cutting reliance on the soft real estate market. Additionally, the cash injection was aimed to boost the firm’s liquidity and allow it to lend more through its deposits backed by enhanced reserves.
However, like other mortgage lenders, HF Group suffered in recent years due to the capping of lending rates between September 2016 and November 2019, a slowdown in the real estate market and more recently the economic fallout from the Covid-19 pandemic.
HF is ranked third in the residential mortgage business with an 11.2 per cent market share, having lent Kes 26.09 billion to 4,101 house buyers as of December 2020, according to Central Bank of Kenya data with a market capitalisation stands at Kes 1.46 billion and valuing Britam’s stake at Kes 703 million.
The price at which the insurer will sell its stake in the impending transaction is expected to be based on negotiations with interested investors.