Nairobi — Equity Bank and British American Investments Company (Britak), have confirmed plans to jointly buy a 24.9 per cent stake in Housing Finance Corporation (HF). The deal is estimated at Sh1.1 billion, about a quarter of Housing Finance's market capitalisation of Sh4.3 billion.

In a statement on Thursday, Equity Bank and HF issued cautionary notices to their respective shareholders on the intention to progress a shareholding deal.

"Equity advises its shareholders that the bank and BAIC have concomitantly signed a conditional sale and purchase agreement with CDC Group Plc for the transfer of 24.9 per cent shareholding in mortgage firm, Housing Finance," the bank said.

Equity and Britak will become key shareholders

In a separate statement, Actis, an emerging markets private equity investor, who manages investments on behalf of CDC Group, said Equity Bank will acquire 20 per cent of the issued shares of HF while Britak will take 4.9 per cent.

If the deal is approved, Equity and Britak will become key shareholders in the mortgage company, it added. Britak Investments is already one of Equity Bank's largest institutional shareholders.

The statement said the terms of the transaction had been agreed on, but were awaiting approval by the Central Bank, the Nairobi Stock Exchange (NSE) and the Capital Markets Authority.

The Commonwealth Development Corporation has a 29.7 per cent stake in the mortgage lender and the Kenya Government holds 7.3 per cent. The public owns the remainder.

HF Chairman, Mr Kung'u Gatabaki issued a similar notice to its shareholders to exercise caution in dealing in the firm's shares until further announcements are made, presumably from the regulators.

HF plans rights issue to raise funds for expansion

Earlier this year, HF announced plans for a rights issue to raise funds for expansion. The mortgage firm expects that a nod from the regulators would pave the way for the company's Rights Issue whose date has now been pushed back to a date to be announced later.

Gatabaki said Equity/BAIC have assured the board that they do not intend to mount a takeover bid for HF shares, but will seek an exemption under the 'Take Over and Mergers' regulations to ensure the mortgage firm continues trading at the NSE even as the deal is consummated.

The private transfer is a separate transaction from the forthcoming rights issue.

HFCK Managing Director, Mr Frank Ireri said he would issue a statement on the potential collaboration and synergistic possibilities for the three companies on Monday.

Equity CEO, Mr James Mwangi said the breakthrough deal is consistent with the bank's growth strategy of diversifying its offering to its over 1.3 million customers and hailed the deal as a vindication of the emergence of Kenyan-owed and Kenyan-run businesses.

"Our goal has always been to deliver value to Kenyans by making available to them innovative financial services and products at affordable prices," said Mwangi. The proceeds of the sale will be returned to CDC who will recycle the capital to finance new investments in the emerging markets.