Kenya: Britam pauses sale of 48.2% HF Group stake
Insurance group Britam Holdings has halted plans to sell its 48.2 percent stake in mortgage financier HF Group after the associate returned to profitability.
Britam had in March 2021 announced it was looking to sell its ownership in the Nairobi Securities Exchange-listed firm which had been making losses for years.
The insurer now says it is considering keeping its ownership in HF which posted a profit in the year that ended December.
“We are reviewing our position in light of HFs bright future,” Britam Group CEO Tom Gitogo told the Business Daily.
The insurer had not made much progress in disposing of its HF stake when the mortgage financier was in losses.
The turnaround of the business makes it relatively more valuable than previously though it still requires more funds to comply with regulatory capital requirements.
Britam had already written off a substantial part of the multi-billion-shilling investment it had made to build its HF stake.
The insurer initially bought into HF as a means of expanding in the real estate and mortgage industry.
HF reported a net profit of Sh265.5 million in the year to December 2022, reversing a net loss of Sh682.7 million the year before on higher income from loans, government securities and other transactions.
The company also benefitted from lower operating costs.
Total interest income increased to Sh4.2 billion from Sh3.9 billion while non-interest income rose to Sh879.6 million from Sh538.1 million.
Operating expenses shrunk by Sh472.8 million to Sh2.8 billion, representing a reduction in loan loss provision and other unspecified items.
HF did not declare a dividend for the review period, retaining all the earnings as it battles to comply with various minimum capital requirements including core capital to total risk-weighted assets.
HF is the only listed firm where Britam is the top shareholder.
The insurer also previously held a significant interest in Equity Group but completed its exit from the country’s most profitable bank last year when it sold the remaining 6.7 percent stake to the International Finance Corporation for Sh13.9 billion.
The insurer says it wants to reduce its exposure to the stock market which previously infused volatility in its earnings in line with bear and bull market cycles.
HF could remain as one of Britam’s key portfolios on the NSE in light of the change of stance. The insurer has committed to support HF in terms of funding required this year.