HF share gains 46 percent on Britam stake sale plan

Mortgage financier HF Group’s #ticker:HFCK share price at the Nairobi Securities Exchange (NSE) has gone up by 46 percent in the last four days following a disclosure of an intended sale of Britam’s stake in the firm to a large bank.

The share closed Thursday at Sh4.99 a unit, which is Sh1.57 higher than the week’s opening price of Sh3.42. This has seen the lender’s market valuation rise by Sh603.8 million in the space of a week to hit Sh1.92 billion.

The stock has been the top gainer in the market every day this week, going up by a near maximum 9.9 percent in each trading session, with investors betting on the potential boost of the lender’s balance sheet if it ties up with a larger bank which has deeper pockets.

A director of Britam told Business Daily last Friday that a transaction adviser has been hired to guide the process of selling part of the 48.22 percent stake in HF Group, which is expected to be completed by the end of the year.

Central Bank of Kenya’s latest data ranks HF second in the residential mortgage business, having lent Sh33.7 billion to 4,717 house buyers as of December 2019, behind market leader KCB which has mortgages worth Sh64.3 billion lent to 8,404 customers.

Former Britam chief executive Benson Wairegi had said last year that the insurer was unlikely to fully hold onto the investment in HF in the long term, but added that Britam would only consider a sale to strategic investors in the medium term when it expected its multibillion-shilling investment to have rebounded to a profit.

The insurer invested more than Sh5 billion to acquire the HF stake through several transactions, including the buyout of Equity Group’s 24.7 percent ownership in the mortgage lender in 2014 for Sh2.8 billion.

As per yesterday’s closing price, Britam’s stake in HF is now valued at Sh925.5 million, up from Sh634.3 million last Friday.