Shelter Afrique set to raise first tranche of Sh8bn bond
Shelter Afrique headquarters in Nairobi. The housing agency has so far issued three bonds between 2005 and 2012, whose amounts have varied from Sh500 million to Sh3 billion. Photo/File
What you need to know:
This is the third year in a row that Shelter Afrique is going to the market to raise funds through a fixed-income instrument that is listed on the NSE.
Shelter Afrique is set to raise the first tranche of a Sh8 billion bond this month, making it the first corporate bond activity in the market this year. The cash will finance private and public organisations doing housing and related infrastructure projects.
The first tranche will consist of Sh3.5 billion, but the offer has a provision to raise this up to Sh5 billion, said the Capital Markets Authority (CMA) in a press statement.
The regulator, however, did not disclose when the rest of the bond would come to the market.
Companies have so far stayed away from the bond market this year. No Kenyan company has sought money through a bond since last July when Consolidated Bank raised Sh1.7 billion to fund expansion.
It is the third year in a row that the pan-Africa housing agency is going to the market to raise funds through a fixed-income instrument that is listed on the Nairobi Securities Exchange (NSE).
Shelter Afrique enters the Kenya market in a month the government is also seeking to raise Sh20 billion in bonds.
“This (last) week saw the CBK offer two-year and 10-year (re-opening) bonds, targeting to raise up to Sh20 billion. The 10-year bond will be offered at a coupon rate of 12.371 per cent while the two-year bond’s coupon rate will be market-determined,” noted ABC Capital in a statement to clients.
Green shoe option
Shelter Afrique will be competing with the Treasury in raising the cash. The two institutions could benefit from interest from fixed-income market investors who oversubscribed the Treasury bill last week.
“Shelter Afrique will use the funds raised to assist private and public sector institutions in Africa in identifying, financing and implementing housing and related infrastructure.
“Shelter Afrique plans to issue the first tranche of Sh3.5 billion with a green shoe option of up to Sh1.5 billion in August 2013,” said CMA in the statement.
CMA said the approval had been granted in line with the requirements of the Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations, 2002.
Shelter Afrique has so far issued three bonds between 2005 and 2012, whose amounts have varied from Sh500 million to Sh3 billion.
The company last issued a bond in December when it raised Sh500 million at a coupon rate of 12.75 per cent. The 10-year bond being issued by CBK for the Treasury will give a coupon of 12.371 per cent, quite close to the rate on the Shelter Afrique bond.
The housing firm has financed numerous projects scattered around the African continent. In Kenya, Shelter Afrique has had 97 projects to date with the total loan amount of Sh14 billion ($167 million).
According to information posted on the company’s website, most of the projects it has participated in financing have been successfully completed. They include the Fedha Estate Phase 2 where it lent out Sh170 million ($2 million), Rahimtullah Trust Tower at Sh170 million ($2 million) and Baraka Housing Estate at Sh130 million (or $1.5 million).
However, a few other loans, such as Sh130 million ($1.5 million) for the Postel Housing Estate and Sh39 million ($450,000) for Tena Site and Services projects, have been cancelled.
Other ongoing projects include the construction of 380 units by Everest Limited where Shelter Afrique is lending Sh130 million (or $1.5 million) as well as development of 16 villas at Syokimau.
