NCBA Group, ICEA Lion Group deal signals expansion

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NCBA Group, ICEA Lion Group deal signals expansion

The move by the NCBA Group and ICEA Lion Group to consolidate ownership of their property businesses has signaled a new round of expansion of the Philip Ndegwa family's multi-billion shilling business empire.

NCBA Group, in which the Ndegwas hold the lead interest at 14.94 percent, has announced plans to buy an additional 66.67 percent of AIG Kenya Insurance Company Limited from an American multinational.

The family's majority-owned company ICEA Lion Asset Management Limited is also in the process of buying out retail investors in the property fund ILAM Fahari I-Reit in a deal valued at Sh402.4 million.

The two deals are the latest in a range of deals involving firms in the family's diversified portfolio, which encompasses manufacturing, real estate, logistics, insurance and banking.

The family's approach to the market over the years has been characterized by selling struggling assets and pursuing mergers and acquisitions in sectors with high-growth potential.

The deal, which is expected to bring in at least Sh2 billion based on the most recent valuations of the local subsidiary, will see NCBA end up with 100 percent of the issued shares of the insurer.

The worth of the majority stake was estimated at Sh2 billion at the end of December 2022, based on NCBA's valuation of its current 33.33 percent ownership in the local insurer at Sh1.028 billion.

The ILAM, which manages Fahari, has offered to take the leading role in buying a total of 36.58 million units as part of a strategy to transform the fund into a restricted Reit and delist it from the Nairobi Securities Exchange.

One of Kenya's wealthiest families, the Ndegwas, has seen firms in which they hold a substantial stake take part in some of the world's biggest corporate deals, running into billions of shillings in value in recent years.

The deals include the acquisition of additional shares of NCBA Group, which was created by the merger of the former NIC Group in 2019 and the former CBA Group.

The Ndegwas recently raised their stake in the bank to 144.9 percent from an estimated 12 percent at the time of the merger.

Between the end of 2021 and July this year, the holdings of NCBA shares under First Chartered rose by 39.95 million shares to 246.15 million units with a current value of Sh9.35 billion.

This has seen them overcome the Jomo Kenyatta family, which has a 13.2 percent holding in NCBA, to become the bank's top shareholder.

The financial services firm ICEA Lion Insurance Holdings has also seen its fair share of deals, including the 2020 acquisition of asset manager Stanlib Kenya from South Africa-based insurer Liberty Holdings, at more than Sh1.5 billion.

The acquisition by ICEA included the assets management arm of Stanlib Fahari I-Reit, which was then renamed to ILAM Fahari I-Reit.

In the same period, the insurance holding firm raised Sh2.4 billion from the sale of a 24.1 percent share to the private equity firm Leapfrog Investments.

The family's deal activity began in early 2015 when it sold its agricultural and hospitality equipment company G-North & Son Limited to businessman Paul Wanderi Ndung'u for an undisclosed sum.

In July that year, they sold ICEA Building in Nairobi's central business district to Jomo Kenyatta University of Agriculture and Technology for Sh1.8 billion, with the property subsequently renamed JKUAT Towers.

In 2016 and 2017 the family sold Ennsvalley Bakery to Unga Group in two tranches totaling Sh535 million. The family holds 50.03 percent of the miller's income. The bakery business suffered quickly after the acquisition, resulting in Unga losing a significant portion of its investment.

In 2018, the family backs a bid by Unga's second-largest shareholder-Delaware-based conglomerate Seaboard Corporation to buy out Unga Group's minority shareholders and delist the miller from the NSE.

The plan was thwarted after some of the small shareholders refused to sell to Seaboard, denying the multinational the 75 percent target it needed.

The minority investors argued Seaboard's offer of Sh40 per share undervalued the miller by a significant margin.