The Ndegwa family has made a u-turn over its declaration not to increase its shareholding in NIC Bank after the lender’s recently oversubscribed rights issue.
The family, through its investment vehicles — First Chartered Securities Limited and ICEA LION Asset Management Limited — said it will not buy additional shares after some of NIC Bank’s shareholders failed to acquire 12.7 million shares they were entitled to in the rights issue.
But the latest regulatory filings show that the family of the late Philip Ndegwa, a former Central Bank of Kenya governor, increased its stake from 24.9 per cent in October to 24.98 per cent as at December 21 — just shy of the 25 per cent ownership limit set by the Central Bank of Kenya.
The additional stake was linked to the new shares bought by ICEA LION Asset Management Limited whose holding grew to 9.14 per cent from 9.06. This is a departure from an earlier position by the Ndegwas not to grow their holding beyond 24.9 per cent after investors applied for shares worth Sh7 billion in the rights, 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 on October 9 after the rights issue results.
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 CBK. 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 and the anchor shareholder was given two years to sell part of his holding to comply with the shareholder rule.
Besides the Ndegwa family, other top investors in NIC Bank also used the rights issue to tighten their grip on the lender. This has seen the holding of the top five investors stand at 46.02 per cent as at December 21 compared to 44.89 per cent in October. Livingstone Registrars Ltd increased its stake to 8.62 per cent from 8.13 per cent, Rivel Kenya Ltd (from 7.73 per cent to 8.29 per cent) and Saimar Ltd maintained stake at 4.13 per cent.
NIC Bank, which is known for asset financing and operates in neighbouring Tanzania and Uganda, said it would invest the proceeds of the rights issue in local and regional expansion as well as in a new banking IT platform.
The Ndegwas 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 Sh5.22 billion based on Friday’s share price of Sh38.50. The share has gained 60.4 per cent in the past year and it reported a 45 per cent growth in net profit to Sh1.6 billion in the six months to June.