Capital Markets

State mortgage firm picks advisers for debut cash call

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Kenya Mortgage Refinance Company (KMRC) chief executive officer Johnstone Oltetia. PHOTO | DIANA NGILA | NMG

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Summary

  • KMRC chief executive Johnson Oltetia said the consultants were considering “a number of market factors” before settling on the amount to be raised, the return to be offered to investors and the repayment period.

State-backed Kenya Mortgage Refinance Company (KMRC) has appointed three advisers to guide its planned debut bond issue whose proceeds will be channelled to banks and Saccos for affordable home loans.

NCBA Investment Bank, Lion’s Head Global Partners and Mboya Wangong’u and Waiyaki Advocates will advise the firm on the cash call targeted for July-September this year.

NCBA Investment Bank is the financial advisory and brokerage unit of NCBA Group PLC #ticker:NCBA, while Lion’s Head is a frontier and emerging markets-focused investment bank with headquarters in London and offices in Nairobi, Lagos, Dubai and New York.

KMRC chief executive Johnson Oltetia said the consultants were considering “a number of market factors” before settling on the amount to be raised, the return to be offered to investors and the repayment period.

The mortgage refinancer is cautiously hopeful of going to the market in the third quarter of 2021, with Mr Oltetia adding “certainty will come once we have the right quantum and tenure” for its debut bond.

This comes as the KMRC has been allocated Sh11.5 billion for the year starting July 2021 in proposed estimates tabled in Parliament last Friday.

KMRC, licensed by the Central Bank of Kenya in September last year to mobilise funds for affordable home loans, has raised nearly Sh40 billion.

This includes Sh2.2 billion in equity capital, Sh25 billion committed by the World Bank and Sh10 billion from African Development Bank (AfDB).

The firm lends the mobilised funds to participating banks and saccos for an annual interest of five percent, enabling the beneficiary commercial lenders issue home loans at single-digit interest rates with a repayment period of up to 20 years.

The firm has so far advanced Sh2.76 billion to cover about 1,400 mortgages which met conditions on size, interest and tenure under the disbursement criteria.

The cash has been disbursed to KCB #ticker:KCB (Sh2.14 billion), HF #ticker:HFCK (Sh515 million), Stima Sacco (Sh69 million) and Tower Sacco (Sh30 million).