News Column

Hf Plans Subsidiaries, D-Reits to Build Up Non-Interest Income

July 23, 2014

James Waithaka

Housing Finance will set up at least two more subsidiaries in the impending restructuring of the mortgage lender once it gets approvals from market regulators.

It is seeking to form a non-trading holding company for the banking division which is listed at the Nairobi Securities Exchange, its property development arm Kenya Building Society and the bancassurance agency.

KBS and Housing Finance Insurance Agency are currently operating as subsidiaries of the bank but will be shifted to the holding company once set up. HF anticipates to get approvals and complete the restructuring by year-end.

"We will have at least two more subsidiaries in line with our 2016 horizon. The joint ventures we are getting into are also part subsidiaries as they are independent vehicles," said Frank Ireri, the managing director.

"We want to increase our non-interest income significantly to 50 per cent by 2016."

He said HF and British American Investment Company, which has sought to take over Equity Bank's stake in the mortgage lender, a looking at partnering to set up a Real Estate Investment Trust scheme.

"We have lots of synergies with Britam already and we are looking at a REITs together, but this is all subject to approvals. There are three to four REITs schemes being set up by different promoters and one is likely to come into the market this year," Ireri said.

HF will focus mainly on setting up a development REITs, likely to be managed by KBS which has already applied for a REITs manager licence.

"D-REITs are a form of funding and can help us reduce reliance on debts to build up more equity," he said, adding that HF has a 40.5-acre piece of land in Nairobi's Komarock area for property development.

HF and Co-operative Bank are the first to be issued with REITs trustees licences by the Capital Markets Authority.

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Source: AllAfrica

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