Treasury allows Ndegwa family to raise NIC stakeMonday September 17 2012
Finance Minister Njeru Githae has allowed the Ndegwa family to own upto a maximum of 35 per cent of NIC Bank—which is above the set limit of 25 per cent.
Mr Githae in a Kenya Gazette notice said the Ndegwa family has till June 2013 to sell any shares above the 25 per cent threshold through the Nairobi Securities Exchange (NSE).
The family of the late Philip Ndegwa, a former Central Bank of Kenya Governor, now owns 24.9 per cent of NIC Bank through its affiliates First Chartered Securities Limited and ICEA Asset Management.
But the shareholding is expected to grow beyond the 25 per cent threshold if other investors will not participate fully in the ongoing lenders Sh2.07 billion rights issue, prompting its need for an exemption from the banking laws.
The law bars individuals and companies that are not commercial banks, government and state –owned companies from owning more than a quarter of a lender licensed by the Central Bank of Kenya.
“In exercise of the powers conferred by section 53 of Banking Act, the Minister for Finance exempts the NIC Bank Limited from the provisions of section 13 (1) to a maximum threshold of thirty five per cent, for a period of one year with effect from the 1st July, 2012,” said Mr Githae in the Kenya Gazette notice. Yesterday, the bank said the exemption request was informed by the need to be within the law in the event the Ndegwa family breaches the quarter shareholder rule.
“Mathematically we expect First Chartered Securities Limited and ICEA to go above the 25 per cent and this happened in 2007 when NIC last had a rights issue,” said Mr James Macharia, the CEO of NIC Bank in a telephone interview with the Business Daily.
In 2007, the bank sought to raise Sh1.2 billion through a rights issue that pushed the shareholding of the Ndegwa family to about 28 per cent, according to Mr Macharia, adding that the anchor shareholder was given two years to sell part of his holding to comply with the shareholder rule.
Other large owners are Livingstone Registrars Ltd 8.13 per cent, Rivel Kenya Ltd 7.73 per cent, and Saimar Ltd 4.13 per cent.
The Ndegwa’s gained entry in NIC Bank in 1996 after it acquired a 20 per cent stake from Barclay Bank of Kenya through First Chartered Securities—an investment firm founded in 1974 by the family patriarch Philip.
The investment firm has closed a number of deals including its acquisition of a majority stake in ICEA Lion Group, which owns ICEA and Lion of Kenya insurance companies—making the Ndegwa’s one of Kenya’s richest families.
It also had interests in catering firm NAS which a French multinational Servair acquired a 59 per cent stake in December estimated at more than Sh2.2 billion ($26 million). The stake of the Ndegwa family in NIC Bank is currently worth 3.39 billion based on Monday’s share price of Sh33.50. The share has gained 24 per cent in the past six months and it reported a 45 per cent growth in net profit to Sh1.6 billion in the six months to June.
NIC Bank, which is known for asset financing operates in neighbouring Tanzania and Uganda, said it will invest the proceeds of the rights issue in local and regional expansion as well as in technological systems.