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New capital top agenda at Shelter Afrique special Jan 31 meeting

Pan-African housing financier Shelter Afrique has called an extraordinary shareholders meeting in Nairobi next Tuesday to discuss fresh plans to raise capital.

This comes at a time the company is under scrutiny following revelations of financial malpractices.

Shelter Afrique legal, risk and compliance director Vipya Harawa had late last year announced that the financier is banking on shareholders to raise $90 million (Sh9.2 billion) in additional capital to improve its balance sheet.

On Tuesday, Mr Harawa highlighted the urgency of the meeting, terming the liquidity challenges faced by the lender as an “imminent and liquidity and capital crisis.”

“Notice is hereby given that the board of directors of Shelter Afrique requests all shareholders to convene at Safari Park Hotel, Nairobi, Kenya on Tuesday 31 January 2017 as 9:00 hours in the morning to discuss corrective action for an imminent liquidity and capital crisis confronting the organisation,” said Mr Harawa.

He said shareholders will have a peek into the level of capital inadequacy the lender is faced with.

Shelter Afrique lost its top credit rating in November in what was attributed to recent concerns over the state of its finances.

Moody’s, a ratings agency, said late November it had downgraded Shelter Afrique’s long-term issuer rating from Ba1 to Ba3, and placed it on review for further downgrade, pending an internal investigation.

Negative assessment

The negative assessment came on the back drop of leaked Shelter Afrique documents which showed how top managers were putting the company at financial risk through creative accounting and sub-prime lending.

It is expected that the findings of the audit report, prepared by Deloitte Kenya, will be part of the agenda at the meeting.

“The report estimates that an additional impairment provision of approximately $6m (about Sh600 million) may be required by Shelter Afrique on the financial position statement of 2015,” states a summary of the audit seen by the Business Daily.

“The board will ensure that where the Final Report has indicated the dereliction of duties with respect to the financial statements by responsible officers and external advisers — including the former Head of Finance — they will be held accountable through appropriate measures.”

Shelter Afrique is owned by 44 African countries together with the AfDB and African Reinsurance.

Kenya is the largest shareholder among governments with an 11.16 per cent stake, second to African Development Bank’s (AfDB) majority share of 22.7 per cent.

Other large shareholders include Ghana (11.02 per cent), Nigeria (9.62 per cent) and Algeria (7.36 per cent).

“Shareholders have pledged to inject $90 million as new money,” Mr Harawa consequently said in December at a press conference in Nairobi after Shelter Afrique received $8.2 million (Sh838 million) in capital injection from AfDB.
Sources had earlier told the Business Daily at the time that the bank’s leadership will ask its shareholders at the January 31 meeting to urgently inject additional capital or allow it to consider reducing its portfolio in line with the thinning reserves.


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