Equity owners bank dividend as they exit HF

Equity Bank owners are set to bag an interim dividend from Housing Finance as they exit the stock on selling a 24.75 per cent stake to British American Insurance Company (Britam).

Britam has now acquired 57.27 million units, equivalent to the 24.75 per cent stake, after the Competition Authority of Kenya (CAK) approved the sale in a last Friday gazette notice.

The register closed for the dividend on August 1, but the notice from CAK is dated October 30 and released last Friday. The two financial firms signed the deal end of June. Housing Finance was paying an interim dividend of 75 cents a share, meaning Equity Bank is entitled to nearly Sh43 million in dividend besides the sale proceeds.

“Yes, Equity Bank qualifies for the interim dividend because of the dates, but not the final dividend, now that they have sold,” said Faith Mwangi, a research analyst at Standard Investment Bank.

“It is notified for general information that …the Competition Authority of Kenya has approved the proposed acquisition of 57,270,000 ordinary shares of Housing Finance of Kenya Ltd by American Investments Company of Kenya Limited from Equity Bank,” said Mr Wang’ombe Kariuki, the CAK director-general, in the notice.

In terms of pricing at the Nairobi Securities Exchange, Ms Mwangi said investors had already factored in the sale, noting that only approvals were awaited. She said Housing Finance is likely to benefit from the shareholding of Britam which now has considerable interest in property development. Housing Finance is venturing into developing property, besides financing its acquisition.

“For Britam, we expect the full impact of the new shares in Housing Finance will be felt next year and not this year. For this year, the effect will be minimal,” said Ms Mwangi.

Britam is developing properties of its own though it has also bought into property firm Acorn.

READ: Acorn reads judge’s bias in Sh3.9bn suit with Britam

In the past six months, Equity Bank has seen its price per share rise by 24.5 per cent. On its part, Housing Finance has gained 17.5 per cent. The buying of Equity Bank shares in HF by Britam was first revealed mid this year.

“Britam and Equity Bank have entered into a share sale agreement dated 30th June 2014 … on which terms Equity Bank has accepted Britam’s offer to purchase the sale shares,” was the initial announcement of the sale.