Nedbank Group now owns 66% of NCBA Group, and NCBA is its subsidiary. The transfer of shares went through the Nairobi Securities Exchange (NSE) on Tuesday, November 3, and a single block trade pushed the day’s equity turnover to KES 107.7 billion.
What happened on the NSE
Equity turnover on November 3 stood at KES 107.7B, against KES 420.4M in the previous session. NCBA accounted for 99.6% of it, or KES 107.3B, according to the NSE market report. The stock traded 1.0B shares and closed 4.26% higher at KES 91.75, up from KES 88.00.
Nedbank’s purchase was a block trade on the NSE’s Block Trade Board. It moved 1,087,362,891 NCBA shares from accepting shareholders to Nedbank, and the shares are registered in Nedbank’s name at the CDSC. NCBA’s closing price values the company at about KES 151.2B across its 1,647,519,532 issued shares, by our calculation.
Foreign investors accounted for 49.93% of value traded, with foreign buys of KES 107.4B and sells of KES 186.9M. That left net foreign inflow at KES 107.2B. The NSE 20 Share index gained 0.37% to 4,131.22 and the Banking Index rose 0.79% to 274.92. The NSE All Share Index (NASI) slipped 0.24% to 236.85.
Trading resumes after a pause
The NSE suspended trading in NCBA shares at the close of business on October 21 so that the share register could be reconciled and the transaction carried out. Trading resumed on November 3. About 34% of NCBA’s shares, or 560,156,641 shares, stay with other shareholders and continue to trade on the exchange.
How the offer played out
Nedbank announced its intention to acquire about 66% of NCBA through a tender offer in January. NCBA’s other shareholders were to keep a 34% stake listed on the NSE. The deal valued NCBA at 1.4 times its book value.
The Capital Markets Authority then exempted Nedbank from making a mandatory offer for all NCBA shares. That allowed a partial offer to go ahead while NCBA kept its NSE listing.
The Central Bank of Kenya approved the deal on August 28 under Section 13(4) of the Banking Act. The deal cleared competition reviews at the COMESA Competition Commission and the East African Community Competition Authority, and Khusoko put its value at KES 116.3B.
The offer closed on July 10. Holders of 79.90% of NCBA’s shares, or 1,316,357,895 shares, accepted it. Because acceptances exceeded the 66% on offer, Nedbank accepted all valid pro rata tenders in full. These were 920,425,367 shares, or 55.87% of NCBA’s issued shares. It scaled down excess applications, taking 166,937,524 of the 395,597,477 shares tendered above entitlement.
What shareholders received
Nedbank issued 43,631,052 new shares at a settlement price of ZAR 250 each. It also paid KES 23,228,613,860.87 in cash to accepting shareholders.
The cash covers the cash portion of the consideration and payments to holders who chose all cash. It also covers fractional entitlements. Settlement began on November 3. The deal was priced at about ZAR 13.9 billion in total.
What changes at NCBA
NCBA keeps its brand, management and board structure. Nedbank will nominate at least two directors to the NCBA board, and NCBA shareholders will appoint one representative to Nedbank’s board.
Beyond NCBA
Elsewhere on the exchange, bond turnover fell 21.2% to KES 5.3B from KES 6.7B, with 159 deals. Derivatives turnover was KES 2.6M across 3,084 contracts. Kakuzi led the gainers, up 7.40% to KES 438.50. KPC led the losers, down 10.00% to KES 12.15.
What to watch
NCBA now has a controlling shareholder and a 34% public float. Trading volumes in the shares, any changes to the board and Nedbank’s plans for corporate and investment banking in the region will show how the ownership change plays out.
