Home Afrika of Kenya Seeking Up to $49 Million in Investment

NAIROBI (Capital Markets in Africa) – Home Afrika Limited, a Kenyan property developer, will return to debt markets to raise as much as 5 billion shillings ($48.6 million) and complete projects in the capital and on the East African nation’s coast.

The company, based in Nairobi, has picked Genghis Capital Ltd. to offer between 2 billion and 5 billion shillings to international investors in the first phase of the funds drive that’s set to begin by April, Chief Executive Officer Dan Awendo said in a March 24 interview.

Materials “should be ready by the end of March 2017 to allow us to launch our fundraising roadshows,” he said. “We hope to get our first closing by July, just before election time.” Kenya holds general elections the following month.

The developer said it’s targeting 40 percent equity and 60 percent structured debt from the capital raising, which will be used to complete infrastructure works over the next three years for its Nairobi, Kisumu and coastal mixed-use projects situated on a combined 891 acres (361 hectares) of land.

The issuance will mark Home Afrika’s second attempt to raise funds from the debt market. In 2015, its effort to sell 900 million shillings of five-year bonds failed because of what Awendo called “governance challenges,” after the company fired two of its chief executive officers within two years of its 2013 listing. The company instead agreed a 500-million shilling syndicated loan from lenders including NIC Bank Ltd. and Co-operative Bank of Kenya Ltd.

Shareholding Structure
This time, the company plans to use the funding drive to modify its shareholding structure, bringing in bigger partners that can offer monetary and technical support if needed, Awendo said. The developer currently has more than 7,300 shareholders, each with a stake of less than 5 percent, he said.

“We have quite a number of both local and international strategic investors who are not currently existing shareholders and we are hoping we can convince them to take some significant shares,” Awendo said. “We should have at least two or three who own at least 40 percent of the company.”

The property developer swung to a 390-million shilling loss in 2015 from profit of 8.96 million shillings in 2014. Awendo said he’s optimistic that growth and revenue will improve, following the overhauling of the company’s board, management and commercial teams. The company is yet to release results for 2016.

“We managed a better year than before, and this is why we didn’t advertise a profit warning this time round,” Awendo said. The company issued profit warnings in 2014 and 2015.

Home Afrika plans to complete its existing projects in the next three years and then begin ones budgeted at 10 million shillings or less per unit. Developing affordable housing will maximize returns for shareholders and help reduce Kenya’s 150,000-dwelling per year housing deficit, he said.

“We want to specifically focus on affordable housing with home prices ranging between 3 million and 7 million shillings,” Awendo said.

Source: Bloomberg Business News