Absa Group Limited, based in South Africa, is set to invest Sh30.9 billion (approximately $239 million) to acquire an additional 16.5% stake in its Kenyan subsidiary, Absa Bank Kenya. This move will raise Absa Group's ownership from its current 68.5% to 85%. The multinational is offering a premium price of Sh34.5 per share to the company’s minority investors, reflecting their confidence in the lender’s future outlook. This offer represents a 28.2% premium to the target firm’s 180-day weighted average price.
The tender offer aims to acquire 895.9 million shares, increasing Absa Group's total holding to 4.61 billion shares from the existing 3.72 billion. The offer price of Sh34.5 per share also represents premiums of 20.0%, 18.9%, and 28.2% over the 30, 90, and 180 trading days volume-weighted average prices, respectively. The offer period for acceptances will run from June 30 until August 11.
Absa Group intends to maintain Absa Bank Kenya's listing on the Nairobi Securities Exchange following the completion of the deal. They have sought an exemption from the Capital Markets Authority (CMA) from making a full buyout offer to all minority shareholders, indicating a strategic decision to retain some public ownership. This acquisition aligns with Absa Group's broader strategy to build a diversified pan-African franchise and deepen its presence in key markets like East Africa, presenting clients with enhanced regional and global opportunities.
This transaction occurs amidst a recapitalization trend in Kenya's banking sector, where institutions are expected to meet a Sh10 billion core capital requirement by December 2029 (potentially extended to December 2032). Another South African bank, Nedbank Group, is also in the process of acquiring a 66% stake in Kenya's NCBA Group, highlighting increased interest and consolidation within the Kenyan banking landscape. Absa's strategic aim is to reduce its reliance on earnings from South Africa, which currently accounts for 65% of its group earnings, by expanding its footprint and consolidating ownership in other African subsidiaries like Kenya and Botswana to gain better returns from the risk exposure.
