Nedbank has announced the intention to acquire a majority stake in NCBA Group in order to accelerate its East African growth strategy.
Body Text: Following this announcement, NCBA Group announced that it has received an investment proposal together with a Notice of Intention (NOI) from Nedbank Group, aimed at acquiring approximately 66% of the ordinary shares of NCBA from NCBA shareholders by way of a Tender Offer.
Furthermore, if the Tender Offer is successfully completed, Nedbank is expected to acquire a controlling interest in NCBA, resulting in NCBA becoming a subsidiary of Nedbank. At the conclusion of the Tender Offer, the remaining shares, which will represent 34% of the issued shares of NCBA, are expected to remain listed on the Nairobi Securities Exchange (NSE).
Scaling in current markets and exploring the investment proposition
According to the official press release, the planned acquisition will value NCBA at a multiple of 1.4 times its Book Value, as the proposed transaction structure is expected to see NCBA shareholders who participate in the Tender Offer receive 20% of their consideration in cash. Furthermore, the remaining 80% is set to be settled through the issuance of Nedbank ordinary shares listed on the Johannesburg Stock Exchange (JSE).
At the same time, this proposed transaction will be consistent with Nedbank’s stated strategy to extend its reach beyond the region of Southern Africa, while also prioritising the high-growth markets of East Africa. Moreover, Kenya's role as a financial center, bolstered by several institutions, optimised capital markets, as well as a dynamic technology sector, is expected to offer a secure foundation for Nedbank’s East Africa expansion.
Following the proposed acquisition, NCBA is set to remain NSE listed, as well as its brand, customer, and human capital decisions will be anchored locally. Furthermore, the process of combining the suite of solutions and experience of both organisations is expected to have multiple benefits. This will include Nedbank’s possibility to strengthen NCBA’s Corporate and Investment Banking capabilities through its global presence, regional and sectoral experience, and overall capacity for cross-border collaboration, while the access to an increased resource base will improve NCBA’s existing infrastructure and support the scaling of operations in Kenya and the broader East African region.
Moreover, as a subsidiary of Nedbank, NCBA staff will have the possibility to access training and career growth opportunities across multiple geographies, while customers and users are set to be given access to a deep talent pool, capabilities, as well as an optimised lending capacity. The transaction is subject to various regulatory approvals, including from the central banks in the relevant jurisdictions, and it is expected to close within a period of six to nine months.
