Housing Finance has transferred its mortgage business unit to a newly proposed subsidiary, as it begins an overhaul of operations to shield itself from financial harm and boost growth of business.
The mortgage financier has picked multinational consulting firm, McKinsey to realign its business that could see some of its workers laid off.
Yesterday it announced establishment of a non-holding company, Housing Finance Group (HFG) and Housing Finance company (HFC) following approval by the central bank of Kenya (CBK).
HFC, the newly formed subsidiary will exclusively handle the mortgage business with the Group’s formally finance and administration director, Sam Waweru appointed as its managing director.
The group’s board also appointed Frank Ireri to manage all subsidiaries as the Group managing Director, as the group earnestly kicks off a restructuring process.
“This restructuring will also present HF Group with an easier route for acquisition and investment. The non-operating holding company will host the group brand and function as a shared service centre for the subsidiaries,” said the group’s chairman, Steve Mainda.
The Banking Act permits non-operating holding companies approved and regulated by the CBK to own more than 25 percent of the equity of banks, financial institutions and mortgage finance companies as well invest in subsidiaries engaged in other businesses.
The new structure, the chair believes would allow the management and oversight of the group from an entity that is better positioned to raise capital and re-distribute to other related entities within the firm.
Under the new management, shareholders of the firm will continue to own the same shares owned before the re-organization with the shares remain listed on the Nairobi Stock Exchange (NSE).
“The Group has embarked on its Vision 2020 strategic plan and has brought on board multinational management consulting firm, McKinsey to support the firm’s next phase of growth and progressively enhancing shareholder value,” said Mainda.
The group posted a modest growth in after tax profits for 2015 at Sh 221.5 million, up a 0.1 percent from Sh221.1 million posted in 2014.
The net non-performing loan stood at Sh2.8 billion up from Sh2.5 billion in 2014.
Plans are underway to embark on a rebranding exercise to support identity of the new group structure.
The rebranding exercise will be phased over the next few months to create a strong brand identity for the group and its subsidiaries.
“The new capability will allow the group to offer banking, financial, property and investment solutions across the value chain. We are no longer a mortgage company; HF Group presents a financial and property powerhouse,” said Mainda.