NCBA Group shareholders who have sold a 66 percent stake to Nedbank have booked a capital gain of Sh21.4 billion on the 43.63 million discounted shares of the South African bank.
Nedbank revealed last month that Kenyan investors will be handed a stake equivalent to 8.4 percent of the transaction, at a stake equivalent to 8.4 percent of its issued shares in the transaction, valued at Sh10.1 billion as per the terms of sale agreed in January.
The South African bank is buying the NCBA stake under a hybrid compensation plan in which 80 percent of the consideration is made via a share swap, and 20 percent in cash.
The stock option was done at a conversion rate of 4.02994 shares for every 100 NCBA shares.
The Nedbank shares were priced at 250 rand (Sh1928.50) using the deal’s exchange rate, while the cash option was priced at up to Sh105 per NCBA share.
Nedbank will pay Sh23.23 billion in the cash option, and hand the NCBA sellers 43.63 million shares for the equity option.
Given the appreciation in the value of the Nedbank shares in the period since the conversion rate was set, there is a capital gain that will accrue to the sellers when they eventually get their hands on the stock.
Since the announcement of the offer in January, the market value of Nedbank shares at the Johannesburg Stock Exchange (JSE) has gone up by 9.5 percent, from 274 rand (Sh2,208) to 300 rand (Sh2,410).
However, due to the discount on the conversion rate for the NCBA transaction, the capital gain for the shareholders receiving the share-based compensation is higher at 19.5 percent in rand terms. The shares that were valued at Sh84.1 billion at conversion in shilling terms are now worth Sh105.5 billion at the current market price.
NCBA shareholders will have the option of either holding onto the Nedbank stock for dividends and future capital gains, or they can sell up immediately and book the gains that have accrued since January.
The transaction received approval from the Central Bank of Kenya (CBK) on Monday, with the completion date set for early October.
“The majority of the regulatory approvals required for the offer have now been obtained. The outstanding regulatory approvals are progressing in accordance with their expected timelines and are anticipated to be received towards the end of the third quarter of 2026,” said Nedbank.
Nedbank managed to achieve its target of a 66 percent stake or 1.087 billion shares, handing it control of Kenya’s fifth largest bank by assets.
The multinational received initial acceptances from NCBA owners amounting to 920.65 million shares, or 55.88 percent of the Kenyan bank's issued shares.
Participating investors then exercised an option to sell an additional 395.7 million shares (24.02 percent) in excess applications to help fill the gap.
To limit itself to the planned 66 percent stake, Nedbank rejected 228.99 million shares from the excess applications.
The excess offer option meant that some of NCBA’s leading shareholders, including the families of founding President Jomo Kenyatta and former CBK governor Philip Ndegwa, could end up ceding a larger than initially planned stake in the sale, if they were among those who made available additional units to push the offer over the line.
The Ndegwas’ First Chartered Securities currently controls a 14.94 percent stake or 246.14 million shares of NCBA, and the Kenyattas’ Enke Investments owns 13.2 percent or 217.49 million shares in the bank. Businessman Muhoho Kenyatta also directly holds 12.75 million shares in NCBA.
The two families were among the top NCBA shareholders, owning 77.54 percent of the bank, who had committed to fully participate in the offer. By offering 66 percent of their holdings, these top owners ensured that Nedbank would get a minimum stake of 51.2 percent, before the participation of other investors.
The Ndegwa family was therefore committed to sell at least 162.46 million NCBA shares to Nedbank, while the Kenyattas' commitment stood at 143.54 million shares through Enke and 8.4 million units via Mr Muhoho’s stake.
The two families stood to earn a combined Sh22 billion from the deal through their stock and cash option, but this amount could now be higher depending on whether they were among those who put up additional shares to support the offer.
The deal also represented a good opportunity for the long-term owners of NCBA to realise the value of their stock relative to historical acquisition cost, thanks to the premium on the sale price.
The 1.087 billion shares that Nedbank is buying were valued at Sh100 billion at the Nairobi Securities Exchange (NSE) on Thursday, compared to the value of Sh128.7 billion the owners are realising by selling the stock to Nedbank.
The historical capital gain is even larger, given that the market price of NCBA shares has been inflated in recent months in reaction to the disclosure of the Nedbank transaction in January, and earlier reports of interest in the Kenyan bank by South Africa’s Standard Bank Group.
From October 14, 2025, when Bloomberg reported that Standard Bank was exploring an acquisition of NCBA through its local subsidiary Stanbic Holdings, the share rallied from Sh69.50 to Sh96.25 within the span of one week.
The momentum continued after the January 21 announcement of Nedbank’s offer, pushing the stock to a record high of Sh98.25, before easing back to the present value of Sh92.
For retail investors, the rally has provided an opportunity for large capital gains, with those tendering their shares to Nedbank in line for an even bigger gain once the deal is settled.
