Housing Finance headquarter in Nairobi. Photo/FILE
Equity Bank and its business partner British American Group have increased their stake in Housing Finance by nearly three per cent over the past year as the twin investors race to tighten grip on the mortgage financier.
The bank’s 2010 annual report shows that the British American—through its subsidiaries British American Investments and British American Insurance— increased its stake to 12.41 per cent from 9.75 per cent.
This pushed its total shareholding along with Equity’s 24.9 per cent to 37.31 per cent in December 2010 up from 34.65 per cent in what analysts attribute to their plan to exert greater influence in the running of the mortgage financier besides reaping from its growing dividends.
“The larger stake signals that Equity and its partner British American are keen to have a bigger influence in the HF’s board and shows they are confident of the business,” said Eric Musau.
The move has also raised debate on whether the twin investors could be angling for a complete takeover of the mortgage financier, a quest that Equity Bank has quietly expressed before as it seeks a closer working relationship with HF.
In mid-2007, Equity Bank and British America Investment Company (BAIC) acquired a 24.9 per cent stake from the Commonwealth Development Corporation.
They grew their shareholding to 32.4 per cent in 2008 after it took advantage of the rights issue that the mortgage financier carried out to raise an additional Sh2.3 billion in which some anchor shareholders decided not to participate.
As a result, Equity Bank and its partner bought the 10.8 million shares that had been left on the table by the National Social Security Fund (NSSF) and the Government—earning them an extra 7.5 per cent stake.
The government has a 3.66 per cent stake in Housing Finance while NSSF has a 6.83 per cent holding.
British American bought an additional 11 million shares in the past two years, further cementing hold on Housing Finance at a time analysts expect it to maintain a double-digit growth in profits on increased appetite for home loans.
On paper, Equity Bank and BAIC exist as different entities but they are in the grips of personalities who are bound by common business and commercial interests through cross-ownerships in the twin firms.
Mr Peter Munga doubles as the chairman of Equity Bank and BAIC, while Benson Wairegi, the group managing director of BAIC is also a director of Equity.
BAIC holds 407 million shares in Equity, translating to an 11 per cent stake, making it second largest single shareholder after Helios, which holds 24.4 per cent.
Last year, Equity’s quest to tighten grip on the home loans firm sparked a vicious boardroom battle that led to the replacement of two directors.
This left the board in the hands of Mr Wairegi, Mr Munga and Prof Shem Migot Adhola, who are all directors of Equity.
HF announced a 62 per cent jump in profit to Sh379 million in 2010 helped by increased lending.
Its lending rose to Sh19.5 billion, from Sh14.4 billion in 2008.
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