The Ndegwa family has waived the option to increase its shareholding in NIC Bank after the lender’s shareholders applied for more than three times the amount of shares on offer in its Sh2 billion rights issue.
The family had received the Treasury’s approval to grow its stake above the limit of 25 per cent to a maximum of 35 per cent if other investors failed to participate fully in the lender’s Sh2.07 cash call.
Wednesday, the bank announced that some of its shareholders did not apply for 12.7 million shares they were entitled to under the one-for-four rights, but other investors sought more shares than they were entitled to.
The investors applied for shares worth Sh7 billion, amounting to a 338 per cent subscription rate for the 98.7 million shares on offer.
“In view of the oversubscription, First Chartered Securities Limited and ICEA LION Asset Management Limited, who in aggregate hold a 24.9 per cent stake in NIC Bank, have on their own accord decided not to participate in the take-up of the untaken rights,” NIC said.
The family of the late Philip Ndegwa, a former Central Bank of Kenya Governor, owns 24.9 per cent of NIC Bank through its affiliates First Chartered Securities Limited and ICEA Lion Asset Management.
“The untaken rights will be allocated on a pro rata basis to eligible shareholders who have applied for additional shares according to their rights entitlement.”
The Finance minister Njeru Githae had allowed the Ndegwa family to grow its shareholding in the mid-tier lender to a maximum of 35 per cent with the condition that it will sell shares above the 25 per cent holding through the Nairobi Securities Exchange (NSE) by June.
Kenya’s banking laws bar 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.
Analysts read the request for an exemption by NIC Bank to mean that the bank was preparing for an undersubscription of the cash call.
“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 an earlier interview with the Business Daily.
In 2007, the bank sought to raise Sh1.1 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 of NIC Bank are Livingstone Registrars Ltd 8.13 per cent, Rivel Kenya Ltd 7.73 per cent, and Saimar Ltd 4.13 per cent.
NIC Bank, which is known for asset financing and 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 a new banking IT platform.
The Ndegwas gained entered NIC Bank in 1996 after it acquired a 20 per cent stake from Barclays 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 Ndegwas one of Kenya’s richest families.
It also had interests in catering firm NAS, in 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 worth Sh3.47 billion based on Wednesday’s share price of Sh35.25.
The share has gained 39.6 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.