Equity Bank is disposing of its stake in mortgage lender Housing Finance (HF) to Britam, one of the largest shareholders in the financial institution.
In a note to the Capital Markets Authority (CMA), Britam an insurance firm with interests in real estate in several African countries, Monday said it wanted to buy out Equity’s 24.76 per cent stake in HF.
The bank’s stake of 57,270,000 ordinary shares in the mortgage lender is currently valued at about Sh2.4 billion and the takeover is expected to give Britam more power in running the affairs of Housing Finance.
Britam, through its wholly-owned subsidiary British-American Insurance Company, is already a significant shareholder in the company and on completion of the proposed acquisition of Equity Bank’s stake, will control approximately 46.08 per cent of the issued share capital of the mortgage lender.
Convergence of their shareholding
According to analysts, Housing Finance and Britam are a better match for each other because of the convergence of their shareholding structure and Britam’s intention to invest directly in property.
“The two companies are somehow affiliated by way of existing shareholding. Britam has also been expanding its property development portfolio and the acquisition will further increase its presence in the sector,” Old Mutual analyst Eric Munywoki told Nation on phone.
Last month, Britam issued a Sh6 billion corporate bond to raise funds for investments in real estate and private equity among other businesses across East Africa. Analysts now say Britam may use part of the bond proceeds to fund the purchase of Equity’s stake from Housing Finance.
Britam’s bond comes in two tranches, with the first batch raising Sh3 billion and an option of an additional amount of up to Sh1 billion in a green shoe option. The second tranche will raise Shh2 billion.
The acquisition of the stake in HF is also in line with Britam’s increased investments in other real estate ventures. Recently, Britam acquired a 25 per cent stake in Acorn, a real estate development and property management group.