Nedbank has put an offer to acquire controlling stake in Kenyan-based NCBA bank at R13.9-billion.
The Notice of Intention to acquire 66% of NCBA’s issued share capital was submitted to the NCBA board, Kenyan Capital Markets Authority, Nairobi Securities Exchange, and Competition Authority of Kenya on Wednesday.
This comes after Nedbank sold 21.2% of its stake in Ecobank Transactional Incorporated to Bosquet Investments at R1.8 billion recently, ending its 17-year partnership.
Shareholders to cash in
Shareholders who accept the offer will receive 80% of the consideration in Nedbank ordinary shares and 20% in cash, amounting to KES2, 100 per 100 shares. The Nedbank shares will be issued at a price of R250 per share, using a fixed KES/ZAR exchange rate of 7.7143.
Some shareholders will receive their full consideration in cash. These include institutional investors who, due to Kenyan regulations, are unable to hold offshore-listed shares. As well as shareholders whose entitlement would be fewer than 200 Nedbank shares. For this purpose, cash value per 100 NCBA shares will be KES10, 500.
After completion, Nedbank is expected to hold 66% of NCBA, with the remaining 34% held by public investors on the Nairobi Stock Exchange (NSE). Nedbank noted that its stake could rise slightly above this level. But it would not exceed its targeted holding by more than 5%.
Region has significant strategic importance
Nedbank CEO Jason Quinn said the proposed acquisition forms part of its strategy to grow and diversify outside its core Southern African market. And that East Africa was identified as a region of significant strategic importance.
“Kenya’s role as a regional financial hub, supported by strong institutions, sophisticated markets and a dynamic technology sector, makes it a natural anchor for Nedbank’s East African ambitions. Including Rwanda, Tanzania and Uganda.
“The region’s stable operating environment, consistent macroeconomic performance, a young, growing urbanising population, and vibrant business community, further reinforce its attractiveness and growth potential,” said Quinn.
Expanding footprint across Africa
By partnering with NCBA, described as a top tier Kenyan bank with vast operations, Nedbank aims to expand its footprint across the continent, with a clear focus on East Africa and the SADC region.
NCBA is one of East Africa’s leading financial institutions. It operates 122 branches and serves more than 60 million customers.
The bank manages KES665-billion in assets. And it disburses more than KES1-trillion in digital loans annually. It has also delivered an average return on equity of about 19% since 2021.
