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Capital Markets

Shelter Afrique now eyes bond market as loss falls

Shelter Afrique CEO Andrew Chimphondah
Shelter Afrique CEO Andrew Chimphondah. PHOTO SALATON NJAU | NMG 

Pan-African housing financier Shelter Afrique plans to raise funds from the bonds market in about two years to fund new real estate projects, the firm said Monday.

The company, which is aiming to turn around its fortunes, said however the return to the bond market is still subject to its return to profitability.

Shelter Afrique raised Sh2.9 billion in a bond issue in 2011 and Sh1 billion in 2009. It also listed a Sh5 billion five-year medium-term unsecured note on the Nairobi Securities Exchange (NSE) in 2013, maturing in September 2018.

"We could not raise debt until (we) restructured. Right now, we are in the market and are getting the response,” said Shelter Afrique chief financial officer Kingsley Muwowo during an investor briefing.

"We have applied to the CMA for the bond and we will require two years of profitability. Hopefully we can get this within this year and next year."

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Shelter Afrique, which is jointly owned by 44 African governments including Kenya, the African Development Bank and African Re-Insurance Corporation, posted a Sh59 million loss for the year ended December 2019, narrowing its loss from the Sh940.8 million reported in 2018.

Controls on underwriting of new business saw interest and fee and other incomes dip by 16 percent and 13 percent to $15.3 million (Sh1.64 billion) and $1.3 million (Sh139 million) respectively.

“The return to financial stability as indicated by significant reduction in our operating loss in 2019 is an indication that the turnaround strategy has been both successfully and effective,” said Shelter Afrique CEO Andrew Chimphondah.

The firm which has announced the end to its self-imposed lending moratorium said it is eyeing to grow its loan book under the 2019 to 2023 revised strategy.

“We have about 114 projects in Kenya. We are looking at about 3 project finance opportunities in Kenya, setting up about 5,000 affordable homes at a cost of $80 million,” said Mr Chimphondah.

“With the commencement of loan commitments leading to disbursements on the robust loan pipeline of Sh50 billion from 2020 and beyond the company is poised to return to profitability and provide returns to shareholders.”

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