HF Group head office in Nairobi. FILE PHOTO | NMG Insurance group Britam Holdings plans to sell part of its 48.2 percent stake in mortgage financier HF Group to one of the country’s big banks as part of a review of its investment portfolio.
A director of Britam, which last week scrapped nine top executive positions, told Business Daily that a transaction adviser has been hired to guide the process, which is expected to be completed by the end of the year.
“The plan is to have one of the big banks acquire a majority stake in HF and run it. The partial exit from HF is to allow Britam to focus on its core insurance business,” said the director, who asked not to be identified discussing the share sale.
“Britam could retain a small stake in HF as a passive investor like it does in Equity Group. This means that an offer will also be made to retail investors in HF.”
Potential suitors will be seeking to ride on HF to grow into the mortgage market.
HF is ranked second in the residential mortgage business, having lent Sh33.7 billion to 4,717 house buyers as of December 2019, according to Central Bank of Kenya data.
KCB is the leader in the segment, lending Sh64.3 billion to 8,404 customers over the same period.
“A big bank with access to cheaper source of funds can easily make HF profitable,” the source said.
Britam will meanwhile continue to support the mortgage financier as the process of engaging new strategic investors continues.
The insurer recently gave HF a Sh1 billion subordinated medium term loan to bring the mortgage financier into compliance with minimum capital requirements after years of losses eroded its asset base.
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.HF’s share price has fallen to the current lows of Sh3.48, placing its market capitalisation at Sh1.34 billion and valuing Britam’s stake at Sh646 million.The price at which the insurer and other small shareholders will sell their stakes in the impending transaction is expected to be based on negotiations with interested investors.Britam invested in HF with the goal of accessing new customers and expanding its real estate investment portfolio with the mortgage financier which has been in the property business for decades.“HF Group Plc is a strategic partner […]
