Nedbank CEO Jason Quinn. Picture: Gallo Images/Sharon Seretlo) Nedbank, South Africa’s fourth-largest bank by assets, plans to acquire controlling shares of Kenyan-based NCBA. NCBA is one of East Africa’s leading financial services groups with operations across Kenya, Tanzania, Uganda and Rwanda, and a digital offering in Ghana and the Ivory Coast.
Nedbanktold shareholders on Wednesday that it will spend around R13.9 billion (R250 per share) to acquire a 66% stake in NCBA. The successful completion of the transaction will result in NCBA becoming a subsidiary of Nedbank, while the remaining 34% of NCBA shares will continue to trade publicly on the Nairobi Securities Exchange (NSE). Nedbank makes 80% of its earnings from South Africa, and has attempted to make money from the West Africa region; however, that investment ended in a costly withdrawal.
Should the deal pull through, Nedbank will have its foot in East Africa’s largest economy, Kenya. According to the IMF, Kenya has a GDP of around $132 billion, surpassing Ethiopia’s $117 billion, driven by a diversified economy, skilled workforce, and business reforms. Jason Quinn, Nedbank CEO, said the proposed acquisition represents a milestone in Nedbank’s strategy to grow its southern and East African footprint.
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“The proposed consideration will be structured as 20% cash portion and 80% new Nedbank ordinary shares listed on the Johannesburg Stock Exchange (JSE).” Multiple reasons have been cited for why Nedbank sees it as a good fit to enter the Kenyan market, including strong macroeconomic fundamentals; the size of its economy; a large and growing population; attractive growth prospects; and the primary trade corridor linking Africa with the Middle East, India and Asia. NCBA has 122 branches and serves more than 60 million customers. “NCBA is also among the region’s leading banks by assets, and is a market leader in corporate banking, asset finance and digital banking. NCBA continues to play a key role in supporting Africa’s economic ambitions,” read the shareholders’ note.
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