African housing financier Shelter Africa is looking for institutional investors to bolster its capital position after rebranding as a development bank last year, which allowed it to gain an additional class of investors.
A review of the bank’s articles of association by its shareholders to upgrade it to a development financial institution in October last year also allowed it to include private sector players, pension funds, commercial banks and non-African financial institutions as shareholders, but it has yet to get anything so far.
The Nairobi-based Continental Bank is now in talks with several financial institutions including the Jeddah-based Islamic Development Bank and the US International Development Finance Corporation (DFC) to bring them on board as investors, according to its CEO Thirno Habib Han.
Others are the Arab Bank for Economic Development in Africa and some pension funds across the continent, which could soon pump more investments into the financier, raising its capital base.
“This strategy will allow us to diversify our funding sources, diversify the capital of this institution, and this goes beyond our engagement with our existing shareholders and other African countries that also wish to join us,” Mr. Han said.
The bank's shareholders, led by Kenya, its largest investor, will gather in Kigali next week for the annual general meeting where the new articles of association will be ratified, paving the way for the admission of new investors.
Shelter Afrique, founded in 1982 alongside the African Export-Import Bank (Afrexim) and the African Reinsurance Corporation (AfricaRe), has struggled to consolidate its capital and stakes, lagging significantly behind its peers.
It currently has a capital base of $500 million (Sh65 billion), while peers Afrexim Bank and AfricaRe have a capital base of $5.2 billion (Sh673 billion) and $991 million (Sh128 billion) respectively as of end-2022.
According to its latest financial statements, the bank made a loss of $11.6 million (Sh1.5 billion) in the year ending December 2022, forcing it to skip dividend payments for the seventh straight year. It last paid a dividend in 2015 when it gave its investors $6.82 (Sh883) per share.
The Kenyan government is currently the largest shareholder in the financier with a 16.78 percent stake, followed by Nigeria with 15.74 percent, and then the African Development Bank, which owns 12.11 percent.
It is owned by a total of 44 African countries, the African Development Bank and AfricaRe.