HF Group Plc, a leading financial solutions provider in Kenya, has achieved a remarkable milestone with the successful completion of its Rights Issue. The offering, initially targeting KES 4.6 billion, attracted overwhelming shareholder support, raising applications worth KES 6.38 billion and resulting in a subscription rate of 138.32%. This resounding success underscores investor confidence in the Group’s vision and strategic direction.
Details of the Rights Issue
The Rights Issue, priced at KES 4.00 per share, sought to raise KES 6 billion through the issuance of 1.5 billion new ordinary shares. Structured to offer two new shares for every one held, the offering included a greenshoe option of up to 384,614,168 additional shares to accommodate oversubscriptions. Shareholders applied for a total of 1,595,995,966 shares, reflecting strong demand.
Key statistics include:
- Total subscription performance rate: 138.32%
- Total number of shares accepted under entitlement: 474,201,310
- Take-up percentage under entitlement: 61.65%
- Gross proceeds with full subscription and greenshoe option uptake: KES 5,999,981,020
HF Group CEO Robert Kibaara expressed his gratitude for the overwhelming support, stating, “We went to our shareholders asking for additional investment of KES 4.6 billion. Upon conclusion of the process, we received applications amounting to KES 6.38 billion. We are now firmly on the path to powering our next phase of business growth.”
Purpose of the Capital Raise
The capital injection is intended to fuel HF Group’s strategic objectives across various domains, including:
1. Expanding Product Offerings
The Group plans to enhance its retail and corporate banking products to better serve its customers. With a focus on customer-centric solutions, HF Group aims to address the evolving financial needs of individuals and businesses.
2. Strengthening Technology Platforms
Approximately 15% of the funds raised will be allocated toward upgrading the Group’s technology infrastructure. Investments in digitization will streamline operations, enhance customer experience, and improve overall efficiency.
3. Positioning for Growth
The funds will be instrumental in scaling operations across key business segments such as mortgage lending, bancassurance, and property development. Moreover, the capital boost will help HF Group comply with Kenya’s new banking regulations, which mandate a minimum capital base of KES 10 billion by 2028.
HF Group Chairperson Prof. Olive Mugenda lauded the support from key shareholders, including Britam, NSSF, and retail investors. “This is a great show of confidence by our shareholders. We now have a solid foundation to unlock value for shareholders,” she remarked.
Strategic Focus and Next Steps
The shares will be credited to shareholders’ Central Depository and Settlement (CDS) accounts by December 23, 2024, and trading on the Nairobi Securities Exchange (NSE) is set to commence on December 24, 2024.
The successful Rights Issue aligns with HF Group’s strategic focus on broadening its service portfolio, reinforcing its market position, and driving sustainable growth.
Strengthening Mortgage Lending
With its roots as a mortgage financier, HF Group plans to capitalize on Kenya’s growing demand for affordable housing. The Group is well-positioned to support government initiatives aimed at addressing the housing deficit.
Growing Bancassurance and Property Development
Bancassurance remains a key growth area, leveraging HF Group’s ability to provide integrated financial and insurance solutions. Similarly, the Group is poised to expand its footprint in property development, contributing to Kenya’s real estate sector.
HF Group’s Evolution and Market Position
Established in 1965, HF Group has transformed from a niche mortgage financier into a diversified provider of financial solutions. The Group operates as a non-operating holding company, with subsidiaries such as HFC, HFDI, HF Bancassurance Intermediary, and HF Foundation. Listed on the NSE since 1992, HF Group has earned a reputation for innovation and resilience.
A Legacy of Innovation
Over the years, HF Group has been at the forefront of introducing customer-centric products and services, catering to personal, business, institutional, and diaspora banking needs. Its foray into digital banking has further cemented its position as a leader in Kenya’s financial landscape.
A Renewed Focus on Compliance and Sustainability
The Group’s compliance with new capital regulations not only ensures financial stability but also aligns with its commitment to sustainability. By integrating environmental, social, and governance (ESG) principles into its operations, HF Group is setting a benchmark for responsible banking.
Implications for Kenya’s Financial Sector
The oversubscription of HF Group’s Rights Issue is a testament to the resilience and potential of Kenya’s financial sector. It reflects the growing appetite for investment opportunities in the region, driven by robust economic fundamentals and an expanding middle class.
Investor Confidence
The success of the Rights Issue signals strong investor confidence in HF Group’s strategic direction. It also highlights the importance of transparent governance and effective communication in building trust among stakeholders.
Impact on Competitors
HF Group’s capital raise sets a high bar for competitors, emphasizing the need for innovation, customer-centricity, and technological advancement in Kenya’s banking sector.
Looking Ahead
The conclusion of the Rights Issue marks the beginning of a new chapter for HF Group. With a solid financial foundation and a clear strategic roadmap, the Group is poised to deliver value to its shareholders, customers, and the broader community.
As HF Group embarks on its next phase of growth, it remains committed to fostering financial inclusion, supporting economic development, and contributing to Kenya’s Vision 2030 goals. With a focus on innovation, sustainability, and customer satisfaction, HF Group is set to remain a key player in shaping the future of Kenya’s financial landscape.
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photo source: Google
By: Montel Kamau
Serrari Financial Analyst
20th December, 2024
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