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Corporate

NIC eyes earnings boost with Kenya, Tanzania units buyouts

NIC has increased its shareholding in its various subsidiaries over the past few years. PHOTO | FILE
NIC has increased its shareholding in its various subsidiaries over the past few years. PHOTO | FILE 

NIC Bank has raised its shareholding in its Tanzanian unit and stock broker NIC Securities in a move that will see the Nairobi Securities Exchange-listed firm book more earnings from the subsidiaries.

The lender disclosed in its latest annual report that it took full ownership of NIC Securities in 2013, buying out the remaining 0.07 per cent equity that it did not own in the market intermediary.

It also raised its stake in NIC Bank Tanzania to 69.84 per cent last year from 68.97 per cent in the same period.

NIC has increased its shareholding in its various subsidiaries over the past few years through cash buyouts of minority interests or by applying for more stocks in rights issues where some of its co-investors did not subscribe to their full allotment.

The bank entered the Tanzanian market in 2009 with the 51 per cent acquisition of Savings & Finance Commercial Bank, which it subsequently rebranded.

“Through direct buyouts and additional rights issues, NIC Bank increased its shareholding (in NIC Tanzania) from 51 per cent to 68.97 per cent in 2013,” the lender said in the report.

“This has been further increased in 2014 to 69.84 per cent through the taking up of rights not exercised by minority shareholders.”

The latest transaction values the Tanzanian unit at about Sh1.8 billion, with NIC making a larger claim on the subsidiaries’ earnings.

NIC Tanzania reported a net profit of Sh40.8 million last year, reversing a net loss of Sh277.4 million in 2013.

The NSE-listed firm will now book the entire profits of NIC Securities which raised its profit to Sh55.4 million from Sh35.1 million in the same period.

NIC first bought a 57 per cent stake of stockbrokerage firm Solid Investment Securities in 2007 and rebranded it to NIC Securities.

At the time of sale Solid Investment was majority-owned by, among others, retired civil servant Kithinji Kiragu.

“Through combinations of direct buyouts and additional rights issues, the group increased its shareholding in the subsidiary to 91.34 per cent in 2009.

Through direct buyout, the group further increased its shareholding in the subsidiary to 100 per cent in 2014,” NIC said.

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