NAIROBI, May 15 – Mortgage lender, Housing Finance, Thursday urged the government to waive the Banking Act provision that prohibits them from issuing unsecured loans.
Housing Finance Managing Director Frank Ireri explained that the waiver would enable them to lend to more potential home owners.
At the launch of their rights issue with which they hope to raise Sh2.3 billion, Ireri said the mortgage lender would now be able to take deposits amounting to Sh25 billion and also make extensive lending of up to Sh30 billion following the increase of its capital base.
Central Bank of Kenya (CBK) regulations caps any lending to 25 percent of the core capital.
But with the additional capital, Housing Finance would be able to increase the loan amount from Sh190 million to Sh700 million.
“The additional capital will give us the ability to leverage our balance sheet. We have a huge pipeline of projects that we will be undertaking,” he said.
The MD referred to the financing of several construction projects and the setting aside of some funds for the development of a commercial centre in Komarock and a housing estate.
“Under our Charter for affordable housing, we plan to put up about 30,000 units every year,” Ireri emphasised.
The low-cost housing project would be done together with the government and other development partners.
Plans to offer mortgage backed securities in line with the recently published Capital Markets Authority (CMA) rules, he revealed, were also underway and they would be launched in the third quarter of 2008.
Wanjiku Mugane, the CEO of First Africa Capital – the issue’s Lead Transaction Adviser – said the firm would float an additional 115 million new ordinary shares at a price of Sh20 per share.
“The main pricing consideration has been to offer a fair and attractive price which will ensure support for the issue whilst providing an opportunity for capital gains to shareholders within the reasonable period,” she added.
Mugane said the shareholders would start receiving their provisional allotment letters and Information Memorandum (IM) next week.
“We expect the issue to be fully oversubscribed,” she enthused, adding that they expected investors who get their refunds from the mobile phone operator Safaricom’s Initial Public Offer, would snap up this offer.
Trading of the rights at the Nairobi Stock Exchange (NSE) will start on May 30, 2008, which would provide a platform where non-shareholders of Housing Finance would buy their shares on the bourse.
The officials confirmed that both Equity Bank and the British American Investments Company, which collectively own a 24.9 percent stake in the mortgage firm, would be taking up their rights.
However, the government, which holds a seven percent shareholding at the mortgage firm would not take up its rights.