Category Archives: HFCK

Real Estate Moment

The 11th edition of the Kenya homes expo was held at KICC last week. Here’s recap of that and other real estate on-goings

EXPO: Seemed smaller than the expo last time at the expo, with not as many properties, and more interior stuff like tiles, security, solar vendors. some notable developments included:

– Chinese built Jacaranda Gardens [2br for 5.7m, 3br for 6.6m and 4br apts off kiambu road & northern bypass], – – Nairobi Game Park Apartments [3br apts for 10.95m – located south of the northern bypass below GP Karting/Carnivore (is that in the park?)] by Homesearch (info@homesearch.co.ke)
– Tamarind Meadows (mlolongo) [3br from 6 to 8m] by Tamarind Properties
Family city estate kiambu 4br town houses for 1.5 – 2m
– Edenville (kiambu road) [3 br villa for 10.5m, 4br villas for 12.5 – 14.5m]
by Hass Consult
– Bellevue apartments [2br for 7.8m, 3br for 8.5m] by Villa Care

Not at the expo were new developments in the sector including:
– New golf estates at Vipingo Ridge and Green Park.
And listed in the Kenya Gazette are new real estate developments planned including
– A gated community in Nairobi’s Eastleigh with 569 luxurious 3-br apts with common Masjid, Madrasa, and recreational area
– River Park Estate (Mavoko) which will have 318 4-br maissonettes, and 51 3-br bungalows
– Another one at Mlolongo Weigh Bridge with 96 3-br units with servant quarters.

Financiers: at the Expo were the usual banks present including:
– Housing finance had their Makao Homes for anyone with land looking to build a home. It has construction finance, approved building plans, structural drawings, BQ’s, loans up to 20 years for individuals, 10 years for companies. Interesting pointer is that closing costs are 5% to 9% of home value, something no matter which bank one borrows from, and one which many buyers are not prepared to pay. Loans can also be accessed by investment groups, for plot purchase and construction.
– CFC Stanbic have equity release loans of 90% of home value
– Barclays loans start at 13% up to 20 years and 90% of home cost. They also have equity release of up to 70% on charged property and 50% on unencumbered property, and buy mortgages finance by other banks.
– Savings & Loan (KCB) has mortgages up to 25 years for individuals, and 10 years for companies and investors – and rates are 15%
– New to the mortgage sector is Consolidated Bank with mortgage loans (14.5%, 15 years) and commercial construction loans (15%, for 2 to 10 years)
– Absent were National Bank who started mortgage finance just few weeks ago and Equity Bank.

Mortgage Shake-Up: Equity Bank has muscled in at Housing Finance and shaken up the board, now led by a new Chairman more amenable to Equity’s vision of having low cost mortgages across Kenya. More here

Kenya Property Bubble
Blogger Pesa Tu had a posts on if the Kenya’s property bubble has burst with signs like
-Property sellers not providing indicative prices
-Compression of rental yields
-Rise in furnished apartments
Read more on the post here

Also just released is the latest quarterly report on the real estate market by Hass Consultants which while showed that real estate was sluggish n the first quarter of 2010. Hass also has a nice summary of the investment potential of different Nairobi neighbourhood

Kenya Bank Rankings 1968 Edition

From reading a 1968 book Who Controls Industry in Kenya – a report of a working party comes some history of the Kenyan banking sector. It mentions that in 1968;

– Kenya had 10 banks and all but 3 banks were foreign bank off-shoots.
– They had given loans of loans of £70m, deposits of £83m – a book ratio of 83%, compared to US or UK which had ratios of between 33% to 50%
– Depositors received 3-4% interest on deposits and paid interest of 7-8% on loans [today deposit rates are about the same but loan borrowers pay 12 – 25%]

There were two tiers of banks then;

The Big 3 Banks which 3 held 80% of deposits and 85% of bank assets amounting to K£111 million in 1966 were
– Barclays Bank: Had assets of UK£1.4 billion and had 83 branches, and Kenyan directors included Michael Blundell, S. Waruhiu and J. Opembe. Today it has 111 branches
– Nation & Grindlays (now KCB):  Had assets of UK £401 million and after-tax profit of £1.2 million. It had 50 branches, and 16 directors who were all British. Today KCB has 165 outlets in Kenya
_ Standard Bank (now Standard Chartered): With assets of UK £892 million and a net profit of £3.1 million. It had 41 offices, 22 directors all British.

Next 7 Banks
– Bank of Baroda
– Ottoman Bank
– Bank of India
– African Banking Corporation (subsidiary of Standard Bank)
– Commercial Bank of Africa
– Algemene bank (General Bank of Netherlands)
– Habib bank

Other institutions
– Cooperative Bank of Kenya (established in 1967)
– National Bank of Kenya (established in 1968)

Finance houses
– Big 3 (licensed as banks)

– National industrial credit (then 40% owned by Standard Bank, now NIC)
– United Dominions Corporation
– Credit finance company (now CFC Stanbic)

Others registered as ordinary companies: 
– Transaction Finance Corporation (subsidiary of Cooper Motor Corporation CMC)
– Industrial promotion services (Now IPS, was est. in 1963 by the Aga Khan)
– Africindo Industrial Development (powerful Asian industrialists seeking credit facilities for exports to India with training for Kenyans there)

Development corporations
The big three commercial banks also owned development corporations to undertake longer-term investments than normal banks accepted; these were Barclays Overseas Development [assets of UK£9m and 88 projects in East Africa], National & Grindlays Finance and Development [B£3m] and Standard Bank Development Corporation.

Building societies
As at 1964, they had loaned UK£3m more than they had in deposits; this was after sudden withdrawal in 1959 of £4m savings by European and Asian depositors.
– Savings & Loan Society
– East African Building Society
– First Permanent (East Africa)
– Kenya building society (subsidiary of Commonwealth Development Corporation CDC)
– Housing Finance Company of Kenya (now Housing Finance)

Mostly Equity – Suspensions & Housing Evictions

Equity suspended: Equity Bank was briefly suspended as a Central Depository Agent by the Central Depository & Settlement Corporation (CDSC). They have smartly escaped unscathed without answering any charges owing to:
– Playing one regulator against another the. The Capital Markets Authority (CMA) immediately reversed the ban, and reinstated Equity while terming the CDSC action as being against procedure
– By invoking the ‘small investor’ Equity said that they were in trouble because they had reached out to the small investor, lending them funds to buy Safaricom shares without collateral, and some people did not like that

Lost in the story is:
– Equity split shares were supposed to start trading on April 14, but have been trading as split prices and have appreciated about 40% since the announcement
– The spat makes the CMA and CDSC look bad; by having a turf war (PDF) and fighting in public both claiming to fight for the integrity or interest of investors
– Why won’t Equity pay the minuscule amount or respond to the regulator (CDSC)?
– Comments made by the CEO at the bank AGM, bragging having the most investor accounts in the country coming back to haunt at a time when brokers are (i) broke (ii) resentful/envious
– More tales at the stockskenya forum

Equity moves in at Housing Finance: At Housing Finance, Equity is asserting its authority at the bank and Equity directors will now form 1/3 of the Housing Board of Directors, with Peter Munga (Equity chairman) Benson Wairegi (Equity vice chairman) and Babatunde Soyoye (Helios) all appointed in 2008 and who will all be ratified by Housing Finance shareholders this month.

During the 2008 rights issue at Housing Finance, Equity also increased their ownership stake from 20% to 24.9% while sister institution British American Investments (Britak) also increased from 4.9% to 7.5%. The rights issue also saw the National Social Security Fund reduce stake from 7.8% to 6.8% as the Government of Kenya which did not take up any new shares saw its stake reduce from 7.3% to 3.6%

Opportunities

Free Download Githongo Book – The most talked about book in Kenya – It’s Our Turn to Eat – the Story of a Kenyan Whistle-Blower (John Githongo) by Michela Wrong will be available for download from April 10. yes you probably have a bootleg copy, but this is the real one from the publisher

– Invest in a Government of Kenya Bond to raise 10, billion shillings ($125 million), and earn a potential 10% bond return (PDF); minimum application amount is 50,000 ($625), and the offer closes 22 April. (better than Madoff?)

– Maker Faire Africa (MFA), a celebration of African ingenuity, innovation and invention, will take place August 13-15 at the Ghana-India Kofi Annan Centre of Excellence in ICT in Ghana’s capital, Accra there are opportunities to sponsor the summit

– Jitihada is the Kenya National Business Plan Competition – (details) (PDF) that will be launched in mid-April.

Create a Logo for an international mobile banking conference and win $200. Details here, found at @whiteafrican

Jobs
– Old mutual: Broker distribution manager, Mass market manager. Apply to recruitment@oldmutualkenya.com by 17/4
– National social security fund managing trustee. apply through manpower associates by 26/4
– Capital Markets Authority: Assistant Manager (Legal Framework), Accountant, Assistant Manager (Investigations), Manager (ICT). D/L is 15 April

Unilever Bails

Redux: Things I missed on Kutwa Tuesday

Business Daily: My favorite newspaper is cutting back on online content to charge subscribers $ 132 per year?

Unilever (UK) have applied to buy the under-valued shares from minority shareholders – and if they succeed they will de-list from the NSE. They are offering to buy shares at 62 shillings ($0.95) when they had previously traded at 45/=. Unilever owns 88.23% of the Kenyan subsidiary and need less than 2% to reach their target of 90% and are already within reach [shares from the NSSF or Jubilee and KCB pensions’ will tip them over]

Other exchange changeovers’ have taken places [Serena and CFC] but they companies have continued to trade at the NSE. The NSE / CMA are loath to lose companies, and with (now) 6 suspended companies, this will be interesting. Both Carbacid and BOC were knee-capped by the CMA and their shareholders missed out on the NSE bull run over the last three years [both shares have been suspended since December 2005!]

Streak over briefly: Safaricom has dominated the market since the day it was listed, but yesterday was the first day that another company’s’ shares were traded more than Safaricom since June 9th [KCB had 45.7 million rights traded at ~Kshs. 5 as the Government’s 51 million rights which it forfeited were snapped up by other investors]

Results of the Housing Finance rights issue were released showing that it was fully subscribed [raising Kshs. 2.37 billion], though not wildly over-subscribed (3%?). Either the offer, was not enticing, or people have gotten smart enough not to pay for more than they know they will get (80% of those who applied paid for only what they were allocated, 23% applied for more), those who over will get 74% of extras shares, while Equity and Britak will gets 100% of what they applied for [as the Government and NSSF did not take part]). The big winner are transaction advisers First Africa Capital who are set to bag about Kshs. 31 million [$476,000] from the rights issue

Interest rates have quietly crept up in 2008. The Barclays Bond which closed today had rates of 11.5% for investors as do standard chartered fixed deposits as new loans from Barclays and Equity have crossed upwards of the 20%.

Jobs
most from the daily papers this week

Akili Africa: entry level programmers, ERP implementation consultants, customer relationship manager. d/l is 21/7

Capital Markets Authority: ICT manager, assistant managers [research & product development, policy analysis & planning, procurement & logistics, finance, investigations, ICT, human resources] officers [senior compliance, investigations, senior investigations, customer service, senior policy analysis & planning, legal enforcement, legal framework, policy analysis & planning] analysts [senior financial, financial, stores] d/l is 25/7 by snail mail 74800-00200 to the Acting CEO

CEO of the Constituencies development fund : apply by 31/7 using snail mail

EABL: sales director apply to hr.recruitment@eabl.com

Pilots at Kenya Airways

Management trainees at KCB. D/l is 16/7

Nairobi Stock Exchange: surveillance officer (detect illegal behavior/trades) . apply to recruitment@nse.co.ke by 18/7

Sameer Africa: head of procurement, planning, logistics, ERP administrator, network & systems administrator hr@sameerafrica.com by 21/7

MY gOVErNment
a bit of wishful political – mini-reshuffle
Ministry of Roads: John Michuki
Ministry of Finance: Peter Kenneth
Ministry of Environment: Amos Kimunya
Assistant Minister Home Affairs: Chirau Mwakwere
Minister for Transport: Franklin Bett

Kutwa Tuesday – Post Madaraka Day

a day late, most from the daily papers

banking:
Refund dilemma: What should banks do with Safaricom refunds of 80%? Wisest would be to take the money and accept refunds from disappointed shareholders to pre-pay their loans. It would not be wise to refuse to accept money and insist that borrowers serve their loan durations– as idle money has many employers. The middle ground would be to facilitate investors to buy more safcom or other shares, but that’s a new risk area in investment banking. Ideally there should be loans for secondary market purchases or margin trading.
Next I-bank Equity Bank to set up an investment banking subsidiary (from Ocean Newsletter)
New note Kenya needs a new bank note – denomination 3,000 or 5,000 shillings soon.

NSE talking points:
Fuel hedging?: Despite the reduced flights, its’ amazing that Kenya Airways actually reduced its fuel bill in 2008 (albeit just 1.6%) – this is at a time when other airlines are going bankrupt because of high fuel costs. Can they do it again in ’09 without having to resort to radical fuel saving measures?
– Total Oil interested in Caltex and will compete against the government for the stations
– Government and NSSF to opt out of Housing Finance rights issue
– Fresh off a profit warning, the Sameer Africa boss out; is this the reason the reason ?
– Undugu? Nation reporters in Tz still not comfortable
– The City of Nairobi is now Safaricom broadband hotspot who are selling postpaid hotspot bundles.
Equipment is a broadband modem for 6,000 ($98) and a broadband router for 35,000 ($570) shillings. Service options offered include – up to 700MB for 2,000 ($33), up to 2GB for 4,000, 5GB for 7,000, 8GB for 10,000, and up to 30GB for 30,000 ($491) , but weak customer care remains an Achilles heel for new Safaricom products

Parastatals
– Refinery Coalition Libyan and India to share equaly/ (happily?) in the Kenya Oil Refinery in Mombasa
– The Agriculture Finance Corporation (AFC) asks farmers to continue paying their loans since most of them were not affected by post-election violence
– East African Portland cement to start paying all supplier invoices by electronic financial transactions (EFT)
– Kenya Railways selling land in makupa (7 acres), kibarani (9), embakasi (10) and a building in headquarters (D/L 27/6)
– Kenya Ports Authority to set up an inland container depot (dry port) at Eldoret (seeking bidder to lease operate by 20/6)
– Kenya Re say their will put up a transit hotel at JKIA (was in their 2006 prospectus)
– The City council of Nairobi seeks land to for a new cemetery
– Education: Makerere University (Ug) to offer courses in renewable energy