South African financial services group Nedbank is set to enter the East African market, including Uganda, through the acquisition of a controlling stake in NCBA Group PLC.
This follows NCBA’s announcement that it has received a Strategic Investment Proposal and a Notice of Intention (NOI) from Nedbank Group Limited to acquire approximately 66 per cent of NCBA’s ordinary shares through a Tender Offer to existing shareholders.
If the Tender Offer is successfully completed, Nedbank will acquire a controlling interest in NCBA, resulting in the Group becoming a subsidiary of Nedbank.
NCBA currently operates across Kenya, Uganda, Tanzania, Rwanda, Ivory Coast and Ghana, with a network of 122 branches serving more than 60 million customers. With Nedbank’s entry, the Group is also eyeing expansion into the Democratic Republic of Congo and Ethiopia.
At the conclusion of the Tender Offer, the remaining 34 per cent of NCBA’s issued shares will remain listed on the Nairobi Securities Exchange (NSE).The planned acquisition values NCBA at 1.4 times its book value.
Under the proposed transaction structure, shareholders who participate in the Tender Offer will receive 20 per cent of their consideration in cash, while the remaining 80 per cent will be settled through the issuance of Nedbank ordinary shares listed on the Johannesburg Stock Exchange (JSE).
Nedbank, which is headquartered in South Africa, has its primary listing on the JSE and a secondary listing on the Namibia Securities Exchange. It is among Africa’s largest financial institutions, with an international footprint spanning London, Dubai, the Isle of Man and Jersey.
The proposed transaction aligns with Nedbank’s strategy to expand beyond Southern Africa, with a focus on high-growth markets in East Africa.Formed following the merger of NIC Group PLC and Commercial Bank of Africa Limited, NCBA operates 122 branches across East Africa, holds assets worth USD 5.1 billion, disburses over USD 7.76 billion in digital loans annually, and has averaged a 19 per cent return on equity since the 2021 financial year.
Currently, Nedbank maintains only a representative office in East Africa, meaning there will be no immediate need for in-country integration of systems and operations.The two institutions say the transaction is expected to generate significant synergies.
Nedbank will strengthen NCBA’s corporate and investment banking capabilities through its global presence, sectoral expertise and cross-border collaboration, while NCBA will benefit from access to a larger capital base to scale operations in Kenya and the wider East African region.
As a subsidiary of Nedbank, NCBA staff will gain access to expanded training and career development opportunities across multiple geographies, while customers are expected to benefit from enhanced capabilities and increased lending capacity.
Nedbank has also expressed its intention to preserve NCBA’s brand, governance structures, operational model and management team.NCBA Group Managing Director John Gachora welcomed the partnership, saying it would accelerate the bank’s regional growth ambitions.
“Nedbank is an ideal partner for our growth in the East Africa region. Their strong balance sheet will help us scale in our current markets as well as exploring the investment proposition that the DRC and Ethiopia have to offer,” Gachora said.
He added that Nedbank holds between 16 and 17 per cent market share of loans and deposits in South Africa, leads in vehicle and commercial property finance with market shares of 36 per cent each, and ranks in the top 10 per cent globally on Environmental, Social and Governance (ESG) ratings.
Nedbank Chief Executive Officer Jason Quinn said the transaction fits squarely within the Group’s long-term strategy.
“We have a strategic objective to grow and diversify outside of our core Southern Africa market, and we identified East Africa as a key growth region,” Quinn said.“We are therefore excited to partner with a strong and leading financial services firm such as NCBA to deliver on our growth ambitions.”
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