The Philip Ndegwa family has bought an additional 31.6 million shares of NCBA Group with a current market value of Sh1 billion in transactions that have seen them overtake the Jomo Kenyatta family to become the bank’s top shareholder.
The Ndegwas’ investment vehicle First Chartered Securities raised its stake in the lender to 14.44% –currently worth Sh8 billion— in the year ended December 2022 according to disclosures in the company’s latest annual report.
This was up from the 12.52% stake that First Chartered held a year earlier.
The Kenyattas’ investment vehicle Enke meanwhile maintained its ownership at 13.2% which is valued at Sh7.4 billion.
This is the latest investment by the Ndegwas who have been bullish on NCBA for decades, investing substantial capital starting from NIC Group and CBA Group which were merged in September 2019 to create the Nairobi Securities Exchange-listed bank.
The expansion of First Charterted’s holdings boosted the personal portfolios of NCBA directors and brothers James Ndegwa and Andrew Ndegwa who are among the beneficiaries of the investment vehicle.
James’ direct and indirect ownership in NCBA rose by 5.55 million shares currently worth Sh188.7 million to 75.2 million shares equivalent to a 4.57% stake.
Andrew’s ownership increased by 5.57 million shares currently valued at Sh189.1 million to 76.3 million shares representing a 4.63% equity.
Together, the brothers saw their portfolio grow by Sh377.8 million to Sh5.1 billion. Most of the additional share purchases by First Chartered were implemented towards the end of last year.
The Ndegwas’ increased investment in NCBA comes as the bank’s performance has improved in the wake of the merger which allowed it to build scale in a market where size is a key determinant of the industry’s profit distribution.
“The financial outcomes across the group, three years post-merger are a clear demonstration that we are on track with our strategic priorities and have successfully built a bigger and more profitable business,” NCBA’s chief executive John Gachora wrote in the report.
The bank’s earnings, profitability metrics, dividend payouts and market value have all improved, benefitting long-term investors including former shareholders of NIC Group who were allocated a combined 47% ownership in the merged entity.
NCBA now has a market value of Sh56 billion compared to the Sh17.7 billion that NIC held in the year ended December 2018 –its last full year of operations before the merger.
This implies a gain of Sh8.5 billion or nearly 50% expansion of paper wealth for the former NIC investors alone. NCBA posted a 35% net profit growth to Sh13.7 billion in the year ended December 2022 when it lifted its dividend payout to a record Sh7 billion or Sh4.25 per share.
This marks a payout ratio of 50.8%, more than double the 20.8% distribution of net income that the bank made prior to the merger. NCBA’s return on shareholder funds also improved to 17.1% in 2022 from the 12% recorded in 2018.