Treasury seeks mortgage agency transaction advisor

The formulation of the Kenya Mortgage Refinancing Company (KMRC) is nearing its tail end as government closes in on the final stages of the implementation of the re-financing institution.

The National Treasury is currently sourcing for a transaction adviser to aid in the finalization of KMRC capital structure.

The transaction adviser is expected to support the National Treasury in raising the necessary initial capital to capitalize KMRC.

The adviser’s scope will include engaging with financial institutions who have expressed interest in investing in the institution while assisting Treasury in holding forums for prospective shareholders.

The entity will also be tasked with preparing shareholder’s agreements and all the necessary documentation for execution by prospective shareholders for subscription to the initial shareholders equity.

So far, the government has received backing from the World Bank to the tune of Sh15.1 billion with the African Development Bank (AfDB) promising additional capital to add onto the government’s own kitty as part of the tier one capital required for the formulation of the KMRC.

In March, Treasury Cabinet Secretary Henry Rotich said KMRC would provide long-term liquidity for banks allowing them to issue mortgages at a considerably lower interest rate.

“These are part of the interventions we are doing. The problem is that we do not have long-term liquidity to lend at cheaper rates. If we are stuck at the current rates, we may not see any lending on that (mortgage) space,” he said.

Tier two capital is expected to come from other development partners including commercial banks.

The government is also wooing financing partners to bring them on board to provide funds for the mortgage company with a view of reaching the necessary capital to initiate the formulation process.

KMRC is part of the government’s agenda to reach up to 500,000 affordable housing units by 2022.

The mortgage refinancing company aims at bolstering the agenda by cushioning commercial banks against losses incurred from mortgage issuance in order to reach desired-low interest rates for mortgages in the country.