Market News

HF Group Rights Issue Oversubscribed At 138.32%: A Triumph Of Leadership And Investor Confidence

BY Steve Biko Wafula · December 20, 2024 09:12 am

KEY POINTS

The HF Group’s recent rights issue represents a watershed moment in Kenya’s financial sector, demonstrating the exceptional leadership at HF Group and the unwavering confidence investors place in the brand. Oversubscription of 138.32% showcases the alignment between HF Group’s vision and the expectations of both local and global investors. This milestone is not merely an accomplishment but a testament to a broader hunger for sound investments in Kenya’s turbulent corporate ecosystem.

At a modest offer price of KES 4 per share, the HF Group successfully raised KES 6.383 billion against a targeted KES 4.615 billion, an excess of nearly KES 1.768 billion. This impressive feat was achieved amidst global economic uncertainties and a tightening financial environment. Such a result speaks volumes about the strategic vision of the management team and their ability to inspire confidence in shareholders. The rights issue offered 1.153 billion shares, inclusive of a Green Shoe Option of 346.1 million shares, making the oversubscription rate all the more remarkable.

The transformation of HF Group under the stewardship of CEO Robert Kibaara and Chairperson Prof. Olive Mugenda is nothing short of remarkable. From being a mortgage financier, the Group has diversified into an integrated financial solutions provider. This pivot is indicative of visionary leadership, which has embraced technology and innovation while remaining grounded in robust corporate governance. It is noteworthy that this marks the third consecutive year of profitability for HF Group, underscoring the success of its five-year strategic plan.

Investors, including institutional heavyweights like Britam and NSSF, alongside retail shareholders, have demonstrated immense confidence. Their support is not merely financial but also a vote of trust in the leadership’s ability to deliver value. This confidence is reflected in the allocation strategy, where up to 5 million shares were fully allocated, and the remaining shares prorated at 90.2%. The robust participation by retail investors further signals a renewed optimism in Kenya’s financial markets.

The over KES 6 billion raised will be channeled towards expanding HF Group’s business operations. Of these funds, 85% will go toward growth initiatives, while 15% will be invested in digitization and enhancing customer experience. This allocation aligns with global best practices, ensuring that HF Group not only scales its operations but also modernizes them, preparing for future demands. The management team’s focus on compliance with capital regulations by 2028 further solidifies their commitment to sustainable growth.

This level of competence and strategic foresight is rare in Kenya’s corporate landscape, often marred by inefficiency and mismanagement. HF Group’s ability to inspire confidence in over 1.6 billion shares applied for, worth KES 6.38 billion, highlights the growing appetite for well-structured investments. The market has sent a clear message: investors are willing to support companies that demonstrate accountability, vision, and the ability to deliver tangible results.

Prof. Mugenda aptly captured the sentiment, emphasizing the retail shareholders’ role in demonstrating trust in the Group. This trust was built on years of consistent communication, transparency, and a clearly articulated growth trajectory. The success of this rights issue also underscores the importance of inclusivity, as evidenced by the Green Shoe Option’s success, which expanded the offering by an additional 346 million shares.

The journey to this point has not been without its challenges. The management inherited a brand that had lost its footing but turned it around through disciplined execution of its strategic plan. HF Group has now positioned itself as a benchmark for corporate excellence, setting the stage for other institutions to follow. This accomplishment resonates far beyond Kenya, signaling to global investors that the country’s corporate sector can indeed deliver.

The appetite for HF Group shares reveals a latent hunger among investors for opportunities that combine growth potential with sound governance. This rights issue serves as a wake-up call for other Kenyan corporations: success lies in the confluence of strategic vision, competent leadership, and trust-building with stakeholders.

As HF Group embarks on this new chapter, its management has laid down a blueprint for success. Their actions affirm the belief that great leadership is not about taking credit but creating value for all stakeholders. This philosophy has resonated with the market, making the Group a beacon of hope in Kenya’s financial landscape.

About Steve Biko Wafula

Steve Biko is the CEO OF Soko Directory and the founder of Hidalgo Group of Companies. Steve is currently developing his career in law, finance, entrepreneurship and digital consultancy; and has been implementing consultancy assignments for client organizations comprising of trainings besides capacity building in entrepreneurial matters. He can be reached on: +254 20 510 1124 or Email: info@sokodirectory.com