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Ndegwa family transfers Sh1.7bn NCBA Bank shares

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NCBA Group chairman James Ndegwa (left) and his brother Andrew Ndegwa. FILE PHOTOS | NMG

The Ndegwa family has restructured its ownership in NCBA Group #ticker:NCBA , transferring Sh1.7 billion worth of shares into their investment vehicle in a transaction that contributed to changes in the holdings of individual members.

The bank’s annual report shows that 70.9 million shares previously held in an account by asset manager ICEA Lion was moved to the family’s investment vehicle First Chartered Securities in the year ended December.

The transaction saw the ownership linked to the family of the late Philip Ndegwa, a former Central Bank of Kenya governor, increase by 12.7 million shares to a 12.52 percent stake currently worth Sh5.1 billion.

It rose from 11.75 percent in 2020, indicating that they also bought additional shares in transactions that saw the family close in on the Kenyatta family — the top shareholder at NCBA with a 13.2 percent stake worth Sh5.4 billion.

Among the major shareholders who sold part of their stakes in the period under review is the estate of the late businessman Naushad Merali, whose Yana Investments Limited saw its holdings decline by 11.6 million shares currently worth Sh291.1 million.

Yana Investments previously held 97.2 million shares and this dropped to 85.5 million units equivalent to a 5.2 percent stake, according to the report. Mr Merali died in July last year.

NCBA chairman James Ndegwa’s personal interest in the Nairobi Securities Exchange #ticker:NSE -listed bank increased to 69.7 million shares with a current market value of Sh1.73 billion.

His ownership stood at 67.6 million in 2020.

The ownership of NCBA non-executive director Andrew Ndegwa – who is James’ brother — meanwhile declined marginally to 70.7 million shares worth Sh1.76 billion.

The ownership of the other investors in First Chartered Securities is not disclosed since they are not directors of the bank.

This marks the latest restructuring of the Ndegwas’ interest in the banking sector since the merger of the former NIC Group and CBA Group in October 2019, creating NCBA Group.

The family had separate investments in NIC and CBA and the merger consolidated their ownership in the amalgamated bank that is among the top lenders in the country.

The Ndegwas had a combined 25 percent stake in NIC. James and Andrew on the other hand held a combined 6.6 million shares in CBA, according to disclosures that were made ahead of the merger.

The former shareholders of CBA and NIC took stakes amounting to 53 percent and 47 percent respectively in the merged entity to reflect the relative size of the institutions at the time.

CBA was controlled by the Kenyatta family while NIC was controlled by the Ndegwas. NCBA is working to realise the benefits of the merger, including cutting costs.

The bank has lower returns on shareholder funds compared to its peers such as Equity Group #ticker:EQTY and KCB Group #ticker:KCB , an outcome partly attributed to losses at its regional subsidiaries.

NCBA reported a return on net assets of 16.9 percent in the first quarter ended March. Equity and KCB, which are yet to release their first-quarter performance, had returns on shareholder funds of 22.2 percent and 19.8 percent respectively in the year ended December.

NCBA posted a 20.3 percent net profit growth in the first quarter, helped by higher income from government fixed-income securities.

The bank recorded a net income of Sh3.4 billion in the review period compared to Sh2.8 billion a year earlier.

Interest income from government debt holdings increased by Sh1.3 billion to Sh5.7 billion as the stock of the securities expanded by Sh37.5 billion to Sh194.7 billion.

Interest income from loans meanwhile shrank by Sh239 million to Sh6.2 billion as the loan book remained flat at Sh243.8 billion, signalling increased conservatism.

The bank has announced plans to open more branches in Kenya and other markets as it seeks to grow deposits and its retail client base. NCBA says it will open 12 new branches in Kenya and two others in Rwanda.

For the Ndegwas, the NCBA share movements mark the latest transaction in their diversified portfolio, which straddles manufacturing, real estate, logistics, insurance and banking.

The family’s strategy has been defined by selling struggling assets and pursuing mergers and acquisitions in sectors with high-growth potential.

In 2020, it transferred a Sh2.4 billion stake in ICEA Lion Insurance Holdings to private equity firm Leapfrog Investments.

It sold ICEA Building in Nairobi’s central business district to Jomo Kenyatta University of Agriculture and Technology for Sh1.8 billion, leading to its renaming as JKUAT Towers.

Unga Group #ticker:UNGA , which the Ndegwas have a controlling 50.93 percent stake, announced the deal to sell Ennsvalley Bakery to BigCold Kenya Limited.

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