South Africa’s Absa Group says it is ready to buy additional shares of Absa Bank Kenya in the open market beyond its current purchase of 895.9 million shares in the subsidiary through a tender offer.
The option means that Absa Group could use the transactions on the Nairobi Securities Exchange (NSE) to top up the difference should the tender offer fail to hit the target.
It also offers the multinational an opportunity to grow its ownership in the Kenyan subsidiary above 85 percent if the tender offer is fully subscribed.
Absa Group says there is no minimum level of acceptances in the tender offer.
“Absa Group reserves the right, subject to obtaining any necessary approvals ... to launch one or more additional tender offers in relation to Absa Kenya, or otherwise to acquire additional shares through on-market transactions in Absa Kenya, following the close of the tender offer,” the Johannesburg-based firm says in its offer document.
Other multinationals that have raised their stakes in their local subsidiaries through open market transactions include South Africa’s Standard Bank Group which built its ownership in Stanbic Holdings to 74.92 percent in May 2022.
The multinational had earlier launched a tender offer to Stanbic’s minority investors and later followed up with on-market trades, with the dual strategy lifting its ownership in the Kenyan subsidiary from the 60 percent it held in 2018.
Absa Bank Group is set to spend Sh30.9 billion to raise its ownership in the Kenyan unit to 85 percent from the current 68.5 percent. The transaction will boost its ownership to 4.61 billion shares from the current 3.72 billion shares.
Absa Group is offering a price of Sh34.5 per share to the Kenyan lender’s minority investors who have until August 11 to file their acceptances.
The offer represented a substantial premium to Absa Bank Kenya's stock price in the preceding 182 trading days to June 18 when the proposed transaction was filed.
The share price of the Kenyan bank has rallied on the news of the offer to trade at highs of Sh33.5 on Wednesday.
"The tender offer is not conditional on a minimum level of ordinary shares being tendered in the offer. There is no minimum level of acceptances,” the multinational says.
Absa Group says it intends to retain the Kenyan subsidiary’s listing on the Nairobi bourse on completion of the deal. It has sought CMA’s exemption from making a full buyout offer to all minority shareholders.
Absa Group’s move to buy more shares in Absa Bank Kenya is part of its strategy to capture a larger share of the subsidiary’s earnings while also expanding its African franchise.
The Kenyan unit has significantly raised its profits and dividend payouts while improving returns on shareholders’ funds since its 2020 separation from its former ultimate parent firm, the UK-based Barclays Plc.
The lender’s return on equity (RoE) –a company’s profitability measure based on how much profit it generates from shareholders’ capital– has risen from 16.4 percent in 2019 to peak at 24.5 percent in 2024 before moderating to 22.8 percent in 2025.
Absa Bank Kenya’s net earnings surged from Sh7.4 billion in the year ended December 2019 to Sh22.9 billion in the year ended December 2025, while dividends increased from Sh6 billion to Sh11.1 billion over the same period.
In June, Absa Group received approval from Uganda’s central bank to acquire Standard Chartered Bank’s wealth and retail banking business in the country.
