Kenyatta, Ndegwa and Merali families secure $319 million as Nedbank completes NCBA deal

Kenya's Kenyatta, Ndegwa and Merali families have secured cash and shares worth about $319 million after South Africa's Nedbank Group Ltd. completed its takeover of a 66% stake in NCBA Group Plc, the Nairobi-based lender in which the three families are among the largest investors.

The families will receive about 7.84 billion shillings ($60.3 million) in cash and roughly 15 million new Nedbank shares, worth about R4.26 billion ($259 million) at Monday's price of R282.92 on the Johannesburg Stock Exchange. The payout is based on each family selling the 66% of its NCBA holding it was entitled to tender.

NCBA said on Monday that the deal had closed after it received all regulatory approvals. Its shares will be suspended from trading in Nairobi from about the close on Oct. 21 until Nov. 2 while the share register is reconciled. The shares will move to Nedbank through a block trade on the Nairobi Securities Exchange on Nov. 3, when the cash and Nedbank shares start going out to sellers.

"This landmark transaction establishes a significant presence for Nedbank in East Africa," Nedbank Chief Executive Officer Jason Quinn said.

How the families are paid

Nedbank paid 21 shillings in cash and 4.02994 new Nedbank shares for each NCBA share it bought, a mix that is about 20% cash and 80% stock. At the R250 Nedbank reference price set in January, the package was worth about 105 shillings an NCBA share. Nedbank's shares have since risen, and at Monday's price and exchange rate the same package is worth about 111 shillings.

The Kenyatta family holds its stake mainly through Enke Investments Ltd., which owns 217.5 million NCBA shares, or 13.2% of the bank. Muhoho Kenyatta, the younger brother of former President Uhuru Kenyatta and an NCBA director, owns another 12.75 million shares in his own name. Selling 66% of the 230.25 million shares brings the family about 3.19 billion shillings ($24.6 million) in cash and about 6.12 million Nedbank shares worth R1.73 billion ($105.5 million), for a total of about $130 million.

The Ndegwa family, heirs of Philip Ndegwa, the former governor of the Central Bank of Kenya, holds 246.1 million shares, or 14.9% of NCBA, through First Chartered Securities Ltd., which makes it the bank's largest shareholder. The family's share of the deal comes to about 3.41 billion shillings ($26.3 million) in cash and 6.55 million Nedbank shares worth R1.85 billion ($112.8 million), or about $139 million in all. James Ndegwa, the late governor's son, is NCBA's chairman, and his brother Andrew sits on the board.

The Merali family's Yana Investments Ltd. owns 89.1 million NCBA shares, or 5.4% of the bank. The vehicle belonged to Naushad Merali, the founder of Sameer Group, who died in July 2021, and is now controlled by his widow, Zarin Merali. The family stands to receive about 1.23 billion shillings ($9.5 million) in cash and 2.37 million Nedbank shares worth R670 million ($40.8 million), or about $50 million.

The three families' Nedbank shares will make them a combined holding of about 3% of the enlarged South African lender.

More shares on offer than Nedbank wanted

Shareholders tendered 1.32 billion NCBA shares, or 79.9% of the bank, by the time the offer closed on July 10, well above the 66% Nedbank was buying. Of those, 920.7 million shares came in under shareholders' basic entitlements and 395.7 million through applications to sell more. Nedbank took 1.09 billion shares in total, accepting about 42% of the extra shares offered and turning down 229 million.

The 15 biggest investors, holding 77.5% of NCBA, had signed undertakings in January to tender their full entitlements and take part in the excess applications. Any family that applied to sell more than its 66% will receive more than the figures above. Each shareholder will be told how many shares Nedbank accepted from them after settlement.

Even at the base level, the families keep large stakes in the Kenyan bank. The Kenyattas retain about 78.3 million NCBA shares, the Ndegwas about 83.7 million and the Meralis about 30.3 million. At about 88.75 shillings, near where NCBA traded this month, those holdings are worth about 17 billion shillings ($131 million) together.

A long road to a Nedbank takeover

Nedbank announced the offer in January, valuing the 66% stake at about R13.9 billion. NCBA shareholders who received both cash and shares were offered a premium of 17.9% to 26.2% to the bank's recent trading prices, according to the independent adviser's assessment. Kenya's Capital Markets Authority exempted Nedbank from making a full takeover bid in February, and the Central Bank of Kenya approved the deal in late August. Regulators in South Africa, Rwanda and Tanzania and competition authorities in the COMESA, East African Community and ECOWAS regions also signed off.

In all, Nedbank is paying about 23.2 billion shillings in cash and issuing about 43.6 million new shares to NCBA's sellers. Smaller investors with too few shares to qualify for at least 200 Nedbank shares are being paid entirely in cash, at 105 shillings a share.

NCBA was formed in 2019 through the merger of NIC Group and Commercial Bank of Africa, the lender long associated with the Kenyatta and Ndegwa families. It has operations in Kenya, Uganda, Tanzania, Rwanda and Ivory Coast, and a digital lending business in Ghana. The bank will keep its name, its management and its Nairobi headquarters, and the 34% of its shares not sold to Nedbank will keep trading in Nairobi.

"The name is the same, the people are the same, but the ambition and capabilities are tremendously magnified," NCBA Group Managing Director John Gachora said.