Treasury to defend stake in Shelter Afrique cash call
CBA Group managing director Isaac Awuondo (right) with Shelter Afrique managing director Alassane Ba (left) and CBA chief executive officer Jeremy Ngunze during the signing of a Sh1.5 billion deal at the bank’s Upperhill offices Monday. Diana Ngila
The Treasury has committed to invest Sh1.4 billion in pan-African mortgage lender Shelter Afrique, signalling an intention to defend its stake in the firm that is jointly owned by African governments and the African Development Bank.
Kenya is the largest shareholder of Shelter Afrique among national governments with an 11.16 per cent stake, second to African Development Bank’s majority share of 18.45 per cent.
Other large shareholders of Shelter Afrique include Ghana (11.02 per cent), Nigeria (9.62 per cent) and Algeria (7.36 per cent).
“By the end of the year we expect Kenya will pay $3,2 million (Sh281 million) representing 1,900 shares ($1,000 for the nominal value and $706 as a premium),” Shelter Afrique managing director Alassane Ba told the Business Daily in an interview.
The Treasury’s commitment to participate in the shareholders’ cash call was made at Shelter Afrique’s annual general meeting held last month in N’Djamena, Chad.
The payment of about Sh1.4 billion ($16.2 million) will be spread over the next five years and will see Kenya acquire an extra 9,500 Shelter Afrique shares.
The uptake, however, represents about 10.55 per cent of the total cash call, meaning Kenya’s stake in the mortgage company will be diluted by a small margin.
“Kenya shareholding will be diluted slightly like Nigeria and Ghana,” said Mr Ba. Ghana became a member in 2012 after it committed to pump $13.14 million (Sh1.13 billion) in the mortgage lender, which made Kenya react by declaring that it would reserve $12 million (Sh1.03 billion) to enable it maintain its status as the largest Class A or country shareholder.
Shareholders agreed to increase the authorised share capital by $150 million (Sh13 billion) to $450 million (Sh39 billion) from $300 million (Sh26 billion) through the issue of 90,000 additional shares.
They also re-instated callable capital at $500 million (Sh43 billion) of 500,000 callable shares.
China is expected to become a shareholder of Shelter Afrique in a strategic move to reach the international markets for additional capital at a cheaper rate. The Asian giant’s entry has however not been concluded yet.
“On China membership, we are still pursing the negotiations,” said Mr Ba.
Shelter Afrique’s board also agreed to issue a Sh8 billion corporate bond in the Kenyan market over the next two years.
The lender joins Housing Finance which is also planning to tap the debt market with a bond issue. Housing Finance is seeking financing for its subsidiary, Kenya Building Society. The issue might debut in the fourth quarter of 2013.
Shelter Afrique yesterday signed a Sh1.5 billion loan with Commercial Bank of Africa to finance construction of 2,400 housing units in Mavoko, Machakos County.
The Pan-African lender finances 60 per cent of the building costs while the developer is expected to cover the 40 per cent balance.
Shelter Afrique is raising the funds to enable it roll out more units targeting the middle and low income segments of the population.
In Kenya, the lender financed nine projects totalling $43 million (Sh3.7 billion) targeting middle income earners in Nairobi, Kisumu and Mombasa.
The lender is targeting to finance houses that can be sold at less than Sh3 million.
Analysts say that the low end of the housing market has hardly been scratched despite its huge potential.
“The housing gap can only be partially financed by mortgages, while other solutions are required for lower income groups such as Housing Microfinance and rental housing. The potential size of the mortgage market is currently around Sh800 billion ($9.9billion) around 13 times the current level,” says a research note by Old Mutual Securities.
