Stanbic firm to keep minority investors in push for more shares


Stanbic firm to keep minority investors in push for more shares
Stanbic Bank Kenya CEO Charles Mudiwa adresses investors during the Group's half year investor briefing on July 8, 2019 PHOTO | CITIZEN DIGITAL

In Summary

  • Earlier on Thursday, SAHL announced the receipt of an extension to the exemption of making a full takeover from the Capital Markets Authority (CMA) until December 31, 2020 as the company pursues an additional maximum of 23,024,153 shares.
  • While SAHL has assured of the retention of the bank’s minority investors, the move could signal a slow but progressive surge towards the full acquisition of the lender and the bank’s subsequent delisting from the Nairobi Securities Exchange (NSE).
  • The firm is seemingly keen on taking the quite route to an eventual takeover having skipped its prerogative of invoking a forceful takeover following recent amendments to the law on compulsory acquisitions which allows for forced buyouts with a minimum 50 percent stake threshold.

Stanbic Bank parent company- the Stanbic Africa Holding Limited (SAHL) (UK) is set to retain its minority investors for at least another year even as the group goes after an additional stake in the lender.

Earlier on Thursday, SAHL announced the receipt of an extension to the exemption of making a full takeover from the Capital Markets Authority (CMA) until December 31, 2020 as the company pursues an additional maximum of 23,024,153 shares.

The firm will now seek to buy out an additional stake in its fully owned Stanbic Holdings PLC Kenya subsidiary by enticing willing sellers.

In July last year, SAHL announced its goal of accumulating more from the lender’s listed share capital to a stake of just under 75 percent by the end of 2019 but has seemingly fell short of the target to seek out a further extension.

SAHL however managed to buy out more than 4 million shares between the July 23 announcements to bring its total stake at Stanbic to 69.1 percent or an equivalent 273,167,252 shares at the end of 2018.

Cold takeover?

While SAHL has assured of the retention of the bank’s minority investors, the move could signal a slow but progressive surge towards the full acquisition of the lender and the bank’s subsequent delisting from the Nairobi Securities Exchange (NSE)

SAHL has been keen on raising its share of Stanbic’s publicly issued capital having first committed to underwrite 40 percent balance of shares from the occurrence of under-subscription of its 2012 Ksh.4.5 billion rights issue.

The firm is at the same time likely to take the quite route to an eventual takeover having skipped its prerogative of invoking a forceful takeover following recent amendments to the law on compulsory acquisitions which allows for forced buyouts with a minimum 50 percent stake threshold.

Equities analyst at Genghis Capital Gerald Muriuki reckons parent firms conveniently buy back issued capital by reclaiming shares over time negating the need of invoking hard-line take-over rules.

“This is an easier way of getting at the desired takeover as firms can capture shares at costs slightly above the market trading price. On-market purchase of shares are however difficult without the prompting of minority shareholders,” he said.

The potential seamless takeover of Stanbic may however run into headwinds should the market demand a premium in the aftermath of the interest rate repeal which saw banks stock prices soar substantively.

“The previous premium offer per share at Ksh.95 has already been eroded and as such, investors may be unwilling to let go off their shares in the anticipation of a better return from the market,” Prime Securities Chief Executive Officer Franklin Mutua told Citizen Digital.

Termed in banking circles as one of Kenya’s most efficient lender, the eventful delisting of Stanbic (CFC) would deal a blow to the NSE which recently lost another solid stock in KenolKobil.

Last year, Stanbic Group which also runs the Stanbic Insurance Agency and SBG Securities posted a 44.2 percent profit growth to Ksh.6.2 billion on the back of increased net interest income and lowered credit impairment losses.

Further, the group is fresh out of a recent squeeze on efficiency which saw the lender invest substantively into digital channels while cutting down fat by implementing a voluntary early retirement (VER) program which saw 88 employees leave the bank in August.

Foreign investors make for Stanbic majority shareholders to the rate of 82.7 percent with local institutions and individual investors making for a lesser stake of 17.1 percent.

Stanbic’s share price was quoted at Ksh.108 at the close of trading Thursday.

Stanbic was first listed on the NSE in 1979 and later consolidated on its position as a tier one lender through a merger with CFC Bank in 2008.

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Story By Kepha Muiruri
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