Britam firms grip on Housing Finance after Mauritius-based unit buys stake
Housing Finance managing director Frank Ireri . Increased demand for the mortgage financier’s share has the stock gain 82 per cent at NSE. PHOTO | FILE | NATION
What you need to know:
British-American Insurance (BAI), a life insurer headquartered in Mauritius, bought 2.1 million HF shares last month according to the latest regulatory filings.
A Mauritius-based company associated with financial services group Britam has bought a one per cent stake in Housing Finance, at a time when the firm has announced it is increasing its shareholding in the mortgage lender by an extra 24.76 per cent.
British-American Insurance (BAI), a life insurer headquartered in Mauritius, bought 2.1 million HF shares last month according to the latest regulatory filings. The move saw BAI join the list of HF’s top owners, following other institutional investors such as Equity Bank from which Britam will buy the 24.76 per cent stake.
Britam, which already holds 21.46 per cent equity in the mortgage lender, is partly owned by Mauritius-based British-American Investment Company which also owns BAI.
The share purchases by Britam and BAI will therefore firm the grip of the Mauritian holding company that is controlled by billionaire Dawood Rawat. Britam, for instance, will see its stake in HF rise to 46.22 per cent.
Together with BAI’s one per cent equity, the entities will control a combined 47.22 per cent in the housing financier giving them greater control over the company’s strategic direction and management.
Equity Bank is set to earn a total return of more than 500 per cent from the HF divestiture that will see the lender receive more than Sh2 billion from Britam.
BAI’s investment in Housing Finance is now worth Sh100.4 million based on the Nairobi Securities Exchange-listed firm’s share price of Sh46. BAI is one of the largest life insurers in Mauritius, with its gross premiums standing at about Sh21 billion last year. Its purchase of HF shares is its first high-profile direct investment in Kenya and comes after Mr Rawat stepped up control of his interests in Kenya last year.
Mr Rawat and his nephew Moussa Ibrahim last year joined the board of Britam where they were appointed non-executive directors. Mr Rawat is the single largest shareholder in Britam with an 18 per cent stake valued at Sh10.9 billion.
The increased interest in HF by Britam and its associates has sparked a rally in the mortgage firm’s stock amid increased trading by other large investors.
Phoenix East Africa Assurance, for instance, sold 233,450 HF shares worth ShSh10.7 million in the six months to August. This cut its stake from 0.53 per cent in March to 0.43 per cent last month.
Housing Finance CEO Frank Ireri also raised his shareholding in the mortgage firm to 300,000 units or 0.12 per cent stake last month, up from 225,000 (0.01 per cent stake) in May. The share purchases saw the CEO rise to rank as the seventh largest local individual investor in the company from the previous ninth place.
Increased demand for HF’s share has seen the stock gain 82 per cent over the past one year to trade at Sh46, making it one of the best performing counters at the NSE. The firm posted a 19.4 per cent growth in net profit to Sh474.4 million for the half-year ended June, helped by an income of more than Sh200 million from the sale of 10 million Britam shares.
Housing Finance bought the stocks during Britam’s 2011 IPO that was priced at Sh9 per share, meaning that the mortgage financier realised a gain of more than 100 per cent on the investment.
Its other income — including the Britam shares sold— increased six-fold to Sh311.1 million and pushed total non-interest income up 241.1 per cent to Sh506.2 million. This made up for a slower growth in interest income at 4.7 per cent to Sh2.9 billion despite the loan book expanding by a fifth to Sh38.8 billion.
