Mortgage financier HF Group #ticker:HFCK has created new 500 million ordinary shares valued at Sh2.5 billion, making room for for capital raising in the future.
The new authorised shares were approved by shareholders during the recent annual general meeting, doubling the mortgage lender’s units of authorised stock to one billion and and taking the nominal share capital to Sh5 billion.
Chief executive Robert Kibaara told Business Daily that the new shares will remain unissued for now since HF has no immediate need for capital but they will be crucial when needed.
“We created them so that should we reach a point where we want to get into capital rising, then we will have the hurdle already done. Right now, we are not in the process of raising any core capital,” said Mr Kibaara.
“For purposes of growth ambitions that we have under the new strategy approved in January, we will need more capital and that is why we took this first step.”
In the financial year ended December 2018, HF’s loan book shrunk by 12.5 per cent or Sh6.2 billion to Sh43.2 billion as the group suffered its first loss in more than 10 years.
Mr Kibaara, who joined the firm following the exit of Frank Ireri, said the group wants to grow its loan book further and this will require increased level of capital in the near future.
This, he explained, will require a meeting with shareholders to approve capital raising through ways such as rights issue or inviting a strategic investor to come and put in capital.