45936 - DCM KMRC

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Summary of Investment Information

Project Number

45936

Company Name

KENYA MORTGAGE REFINANCE COMPANY

Date SPI Disclosed

Mar 10, 2022

Country

Kenya

Region

Africa

Projected Board Date

Feb 17, 2022

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

Mar 11, 2022

Department

Regional Industry - FIG Africa

Industry

Financial Markets

Previous Events

Approved : Feb 17, 2022
Signed : Feb 22, 2022
Invested : Mar 4, 2022

Sector

Secondary Mortgage Institutions

Additional Project Attributes

Blended Finance
Public-Private Partnerships

Project Description

Kenya Mortgage Refinance Company ('KMRC') is a greenfield entity established in April 2018 with the purpose of providing long-term funding to Primary Mortgage Lenders ('PMLs') to develop the affordable housing segment in Kenya and increase access to affordable housing finance. KMRC received its operating license in September 2020.

IFC will serve as an anchor investor in KMRC's first Medium-Term Note ('MTN') bond program of up to KES 10.5bn (~US$93mn) by purchasing up to 40% of the bonds. The bond proceeds will be used to increase the availability of affordable housing finance in Kenya.

The project is expected to be supported by the IDA19 IFC-MIGA Private Sector Window Local Currency Facility ('IDA-PSW LCF') as described in the Blended Finance Section.

Associated Advisory Engagement

The Project will be accompanied by advisory services designed to support the development of a pipeline of mortgage loans in IDA-eligible regions. IFC advisory will engage PMLs in market scoping for an in-depth understanding of the untapped market for mortgages, incremental housing, self-construction and home improvement loans, as well as identifying challenges that prevent market penetration. The engagement will also enable PMLs to build their capacity in targeting prospective borrowers in IDA-eligible regions.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	36.97
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Housing Finance

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

(i) Increased access to housing finance: KMRC, through its role as a mortgage liquidity and refinance facility, is expected to expand access to longer-term funding for housing finance, giving commercial mortgage lenders the ability to on-lend for longer tenors at a fixed rate. (ii) Increased affordability of housing finance: Longer loan tenors at which Primary Mortgage Lenders can extend to borrowing customers will lower monthly mortgage payments, thus lowering the income required to buy a house. (iii) Financial integration: The Project is expected to contribute substantially to financially integrating housing finance with Kenya's debt capital markets, allowing more effective intermediation of longer-term capital from savers (local institutional investors) to corporate borrowers in the housing sector.

E&S Category Rationale / Risks and Mitigation

This project has been classified as a category FI-3 project in accordance with IFC’s Sustainability Policy. KMRC will provide long-term finance to banks and other financial institutions to support mortgage lending. The environmental and social risks associated with these lending activities are considered low risk and carry minimal or no adverse environmental and social impacts. The Project will not support coal-related activities, or higher risk business activities that may include: a) involuntary resettlement, b) risk of adverse impacts on indigenous peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage or d) significant occupational health and safety risks. The Company’s HR policies and practices are consistent with IFC Performance Standard 2 on Labor and Working Conditions. The Client will also be required to meet basic Life & Fire safety requirements and the requirements of IFC’s Performance Standard 2 on Labor and Working conditions. IFC will monitor changes in the client’s portfolio supported by the Project and may require additional E&S measures if there’s an increase in E&S risk.

Contacts

For Inquiries About the Project, Contact

Kenya Mortgage Refinance Company
Johnstone Oltetia
Chief Executive Officer
+254 111 022 400
info@kmrc.co.ke
27th Floor, UAP Old Mutual Tower, Upperhill Road, Upperhill, Nairobi
https://kmrc.co.ke/

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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