Shelter Afrique turns to shareholders for Sh9.2bn after year of turbulence
AfDB director general Gabriel Negatu (left) and Shelter Afrique company secretary Vipya Harawa during AfDB's announcement of an agreement to increased shareholding in the firm on December 23, 2016. PHOTO | DIANA NGILA
What you need to know:
The housing financier is banking on shareholders to raise $90 million (Sh9.2 billion) in additional capital to improve its balance sheet.
Pan-African housing financier Shelter Afrique has called an extraordinary shareholders meeting in Nairobi on January 31 to discuss fresh capital raising plans with shareholders — hoping to cap a year when the company was under the spotlight following revelations of financial malpractices.
Shelter Afrique legal, risk and compliance director Vipya Harwa announced at a Press conference on Friday that the housing financier is banking on shareholders to raise $90 million (Sh9.2 billion) in additional capital to improve its balance sheet.
Shelter Afrique lost its top credit rating last month in what was attributed to recent concerns over the state of its finances.
Moody’s, a ratings agency, said late November it had downgraded Shelter Afrique’s longterm issuer rating from Ba1 to Ba3, and placed it on review for further downgrade, pending an internal investigation.
The negative assessment came on the back drop of leaked Shelter Afrique documents which showed how top managers were putting the company at financial risk through creative accounting and sub-prime lending that is now under investigation. A final audit report is expected early next year.
Kenya is the largest shareholder of Shelter Afrique among other governments with an 11.16 per cent stake, second to African Development Bank’s (AfDB) majority share of 22.7 per cent.
Shelter Afrique is owned by 44 African countries together with the AfDB and African Reinsurance. Other large shareholders of Shelter Afrique include Ghana (11.02 per cent), Nigeria (9.62 per cent) and Algeria (7.36 per cent).
“Shareholders have pledged to inject $90 million as new money,” Mr Harwa said.
“This (new capital) will provide the institution the resources it needs to implement its ambitious 2016-2020 strategic plan.”
Separately sources told the Business Daily that the bank’s leadership will ask its shareholders at the January 31 meeting to urgently inject additional capital or allow it to consider reducing its portfolio in line with the thinning reserves.
“Our capital adequacy ratios and leverage ratios have come under strain and the meeting will discuss how to resolve this. The plan is to have the additional $90 million injected or we cut back on our expanded portfolio even though there is a huge demand for our services in the region,” said the official who sought anonymity.
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