Some Kenyan institutional investors in NCBA Group, one of East Africa’s largest banks, may be forced into an all-cash exit if South Africa’s Nedbank proceeds with its plan to acquire a controlling stake in the Nairobi-listed lender.
Nedbank intends to buy about 66% of NCBA. The offer is structured as a combination of Nedbank shares and cash. But investors unable to legally hold foreign-listed securities may not receive the share component of the deal.
Under the terms of the offer published on January 21, shareholders who accept the transaction will receive Nedbank stock listed on the Johannesburg Stock Exchange (JSE) alongside a cash payment. Yet the transaction notice acknowledges that some investors, particularly regulated institutions in Kenya, may not be permitted to hold offshore equities.
“NCBA shareholders who are institutional shareholders and have accepted the offer but due to applicable laws or regulations in Kenya binding on them cannot invest offshore and would therefore be restricted from taking up JSE-listed shares, shall be paid their full consideration in cash,” the notice said.
The transaction would effectively become a partial sell-down rather than a share swap for those investors, highlighting the regulatory constraints that often complicate cross-border banking deals.
Kenyan pension funds, insurers, and some asset managers operate under rules that limit their exposure to foreign assets. While those limits vary by institution, they can restrict holding securities listed outside the country, including shares on South Africa’s Johannesburg Stock Exchange.
Some NCBA shareholders could exit the lender entirely after the transaction is completed, even if other investors become Nedbank shareholders through the stock component of the offer.
The deal is structured as a partial pro-rata offer covering roughly 1.09 billion NCBA shares, allowing shareholders to tender up to two-thirds of their holdings. Nedbank would become the majority owner while leaving the remaining shares in public hands on the Nairobi Securities Exchange (NSE).
Nedbank has positioned the acquisition as a strategic move into East Africa. NCBA operates in Kenya, Uganda, Tanzania, and Rwanda and provides digital banking services in Ghana and Ivory Coast, serving more than 60 million customers across the region.
The South African lender currently runs only a representative office in Nairobi. Acquiring NCBA would give it immediate scale in a fast-growing banking market where mobile lending and digital financial services have expanded rapidly.
Completion of the deal remains subject to regulatory approvals across several jurisdictions, including Kenya’s banking and competition authorities, with closing expected in 2026 if approvals proceed on schedule.
