BRITAM HAS acquired an extra 2.6% stake Housing Finance (HF) raising its total shareholding to 48.63%, Business Daily reports today, moving within kissing distance of taking over the mortgage firm.
Britam, the insurance and investment firm, last year bought out Equity Bank’s 24.7% stake in HF at a cost of Ksh2.78 billion, raising its ownership in the financier to 46.04% from the previous 21.4%. The additional acquisition which is reflected in the May regulatory filings is valued at about Ksh243.8 million going by the mortgage lender’s current market price of Ksh27 per share.
Britam appears to have set its sight on taking over Housing Finance and it also needs to acquire an extra 2.37% stake and become the majority shareholder and principal owner of the company. At this rate, Britam could soon place a bid to buyout Housing Finance.
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HF concluded a Ksh3.5 billion rights issue earlier this year in which shareholders including Britam got a chance to raise their stakes. Britam says rising interest in HF is informed by the need for a strategic partner in property development that also serves to fill its investment portfolio. “There are significant potential synergies between HF and Britam, which we aim to continue exploiting in order to create significant value for our shareholders,” said Britam in its latest annual report.
The insurance group, for instance, can participate in HF’s property projects as an equity or debt investor. HF also offers Britam a wider distribution network through which it can sign up more customers for its insurance business under the bancassurance model.
The investment also benefits Britam in the form of dividends paid by HF and capital appreciation on the mortgage financier’s stock. Britam, for instance, received a dividend of Kh84.5 million from HF on the associate’s results for the year ended December 2014.
Britam’s total stake in the company now has a market value of Ksh4.5 billion. The insurance group continues to categorise HF as an associate, noting that it does not have effective control over the housing lender.
Other institutional investors have reduced their interest in HF. The National Social Security Fund (NSSF), for instance, cut its HF stake to 2.2% from 6.79% in December, according to May filings. Another entity, SCB Pan African Linked Unit FD, also cut its ownership to 3.3% from 3.93% in the same period.
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