hisah wrote:Why did JM/Equity cash out instead of partial sale if indeed this is a gem? This move still remains a sticky puzzle to me. I think by year end we will have some clues.
Housing Finance was allowed to take customer deposits like banks (including Equity) and Equity wants to go into mortgage business big time (Like Housing Finance). This makes them DIRECT competitors!!!
See the last two paragraphs in the link below:
Link One: Why Equity had to sell their Stake in Housing FinanceQuote:Prof Adholla has represented the interest of Equity Banks in HF. The
bank however sold its entire 24.7 per cent interest in the mortgage
financier to Britam for Sh2.8 billion.
Management said change of law allowing banks to conduct
mortgage business and Housing Finance to operate current
accounts advised the decision to sale as they two institutions would
be competitors.
Further more, Central Bank issued guide lines discouraging Banks from having strong control over financial institutions that are not their subsidiaries.
See paragraphs 5 and 6 in the link below:
Link Two: Why Equity had to sell their Stake of Housing FinanceQuote:The agreed price was Sh47.70 per ordinary share. The HF share sale
was to see Equity comply with Central Bank of Kenya guidelines
discouraging banks from having strong control on other financial
institutions which are not subsidiaries.
Equity’s disposal of its shareholding in the mortgage firm was also
seen as driven by new stringent corporate governance regulations
that effectively curtailed its ambitious plans for the mortgage firm.
The transacting parties anticipated that the deal would have been
completed within three months but delays in receiving all regulatory
approvals delayed the date by a further three months.
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.