On 28th August 2026 the Central Bank of Kenya approved the acquisition of up to 66 per cent of NCBA Group PLC by Nedbank Group Limited, closing the last domestic gate on one of the largest banking transactions this market has carried.
The Transaction
Nedbank Group Limited, the Johannesburg-listed South African banking group, is acquiring 1,087,362,891 ordinary shares in NCBA Group PLC, being 66 per cent of NCBA’s 1,647,519,532 issued shares. NCBA Group PLC is a non-operating holding company listed on the Nairobi Securities Exchange, with banking subsidiaries in Kenya, Uganda, Tanzania and Rwanda.
The route to that 66 per cent was neither open-market accumulation nor a negotiated block purchase from the anchor shareholders. It was a partial, pro-rata tender offer extended to every name on the register. Each shareholder was invited to tender 66 per cent of their beneficial holding, with excess applications accepted subject to scale-back. The consideration was KSh 105 per share, settled approximately 80 per cent in newly issued Nedbank shares and 20 per cent in cash, 4.02994 Nedbank shares plus KSh 2,100 for every 100 NCBA shares accepted.
The offer opened on 28th May 2026 and closed on 10th July 2026. Before it opened, Nedbank held irrevocable undertakings covering 77.54 per cent of NCBA’s issued shares. On close, 1.316 billion shares, 79.9 per cent of the register, had been tendered. Nedbank takes 66 per cent. The remaining 34 per cent stays in public hands and NCBA retains its NSE listing, its board structures and its brand.
Issue One: The Capital Markets Authority and the Regulation 5 Exemption
Regulation 2 of the Capital Markets (Take-Overs and Mergers) Regulations, 2002 defines “acquiring effective control” as the acquisition of shares carrying not less than 25 per cent of the votes attached to a listed company’s ordinary shares. Crossing that line engages the take-over notice obligations in Regulation 4 and, with them, the obligation to extend an offer to the whole register.
Two features of the code closed off the incremental route entirely. First, a shareholder already holding between 25 and 50 per cent may acquire no more than five per cent of the listed company’s shares in any one year. Second, the first step past 25 per cent would itself have triggered the code. An acquirer starting from nil could not have crept to 66 per cent; on those numbers it would have taken the better part of a decade and would have engaged the mandatory offer at the outset in any event. Stake-building was never available, and the disclosure “tripwires” often cited in commentary on this deal never arose on these facts.
What Nedbank sought, and obtained from the Authority in February 2026, was an exemption under Regulation 5, which permits the Authority to exempt a person or an offer from compliance with Regulation 4 where the circumstances serve the wider interests of the shareholders and the public, a category that expressly includes “a strategic investment in a listed company that is tied up with management or any other technical support”.
The distinction matters. Nedbank was not excused from making an offer. It made one, to everybody, at a single price, on identical pro-rata terms. What it was excused from was making a full one, from being obliged to buy every share tendered to it. Equality of treatment, the animating principle of the code, was preserved; universality of acquisition was not required.
Issue Two: The Central Bank of Kenya and Section 13 of the Banking Act
Section 13(1) of the Banking Act (Cap. 488) prohibits any person from holding, directly or indirectly, or otherwise having a beneficial interest in, more than 25 per cent of the share capital of an institution, save for another institution, the Government of Kenya or of a foreign sovereign State, a state corporation, a foreign company licensed to carry on the business of an institution in its country of incorporation, or a non-operating holding company approved by the Central Bank.
Section 13(4) further provides that no institution shall transfer more than five per cent of its share capital to any one person except with the prior written approval of the Central Bank, the provision the Central Bank cited when it announced the approval on 31st August 2026, having granted it on 28th August 2026, effective on completion in accordance with the terms of the agreement.
The sequencing deserves attention, because it is commonly reported the other way round. Prudential clearance did not precede the market process; it followed it. The Central Bank’s approval came roughly six months after the Authority’s exemption and some seven weeks after the offer had already closed. An acquirer that treats section 13 as a condition precedent to launching an offer will never launch. It is a condition of completion, and the offer must be documented so that it can be withdrawn or lapse if the approval does not come.
Issue Three: Competition and Not Where Most Expect
Noting that NCBA’s banking operations span four member States, the merger carried a regional dimension. Clearance came from the COMESA Competition Commission, which found that the merger was not likely to substantially prevent or lessen competition in the Common Market and raised no public interest concerns, and from the East African Community Competition Authority. Prudential approvals were separately obtained from the Prudential Authority of the South African Reserve Bank, the Bank of Tanzania and the National Bank of Rwanda.
There was no free-standing merger control process before the Competition Authority of Kenya. Where the COMESA one-stop regime is engaged, notification is made to the Commission and the national merger jurisdiction of member States gives way. Practitioners advising on regional bank consolidations should test that question before filing anywhere: a reflexive national filing costs time and fees and secures nothing.
Issue Four: The Float
Under the Capital Markets (Public Offers, Listings and Disclosures) Regulations, 2023, the minimum free float for the Main Investment Market Segment is 15 per cent of issued shares held by at least 250 shareholders, reduced from the previous 25 per cent and 1,000 shareholders.
The retained 34 per cent is therefore not a figure engineered to scrape past a listing threshold. It is more than double the floor. The cap reflects commercial and regulatory judgment about domestic ownership, secondary market liquidity and the optics of a foreign acquisition of a systemically important local bank not the bare requirements of the listing rules. Advisers should be careful not to present it as compliance-driven when explaining the structure to clients.
PRACTICAL IMPLICATIONS
- A partial offer is available in Kenya, but only by dispensation. There is no partial-offer regime. Any acquirer contemplating a capped stake in a listed company must build its case under Regulation 5 and engage the Authority early, before the structure is fixed in transaction documents.
- Sequence the regulators; do not stack them. Capital markets dispensation first, competition clearance next, prudential approval last and as a condition of completion. Building the sequence in reverse stalls the transaction before it opens.
- Test whether COMESA and the EAC displace the national competition authority. For a target with operations in two or more member States, the one-stop regimes are likely to be engaged and national filings may be unnecessary.
- Irrevocable undertakings do the work that stake-building cannot. Where the code forecloses incremental accumulation, pre-commitment from the register is the substitute. Undertakings covering 77.54 per cent gave this offer its certainty before a single share changed hands.
- Scrip consideration imports a second regulatory perimeter. Roughly 80 per cent of the consideration is newly issued Johannesburg-listed stock. Kenyan shareholders taking scrip acquire a foreign listed security, with attendant foreign exchange, custody, capital gains and disclosure consequences. Advisers to selling shareholders should therefore model the after-tax outcome of the scrip and cash components separately.
- The residual float is a commercial decision, not merely a compliance one. With the statutory floor at 15 per cent, the size of the float an acquirer leaves behind is a matter of strategy, liquidity, local ownership and regulatory goodwill and should be justified on those terms.
- Minority shareholder protections survive the 66 per cent acquisition. Sections 323–331 of the Companies Act, 2015 provide supplementary protections on takeovers, including squeeze-out and sell-out rights relevant to remaining shareholders. The acquisition of 66 per cent does not by itself extinguish the rights of the 34 per cent minority; any subsequent steps toward a higher holding should be tested against the applicable statutory thresholds, notices and valuation requirements.
The transaction will be remembered for its size. Its lasting value to this market lies in its architecture, and in the questions that architecture leaves for the Authority to answer.
This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary as set out in the article should be held without seeking specific legal advice on the subject matter. If you have any query regarding the same, please do not hesitate to contact our Banking & Finance, Commercial & Corporate Department vide WACommercial@wamaeallen.com .
About the author
Janeirene specializes in real estate and securitization and banking and finance. She is a promising transactional advocate who has experience in real estate and securities law, transactional law and advisory and has handled complex transactions and advisories.
Peris is a results-driven and disciplined legal professional committed to delivering exceptional value to clients. With expertise across various legal fields, she provides strategic legal solutions tailored to diverse client needs. Her strong interpersonal skills, dedication, and meticulous approach to legal practice enable her to navigate complex legal matters effectively.
Denis Mutugi specializes in Commercial Litigation and Alternative Dispute Resolution.
Denis graduated with a Bachelor of Laws, LLB (Hons) from The University of Nairobi in 2021 and was admitted to the Roll of Advocates of the High Court of Kenya in the year 2023.
Denis has amassed a considerable wealth of experience in conducting legal research on various complex legal matters touching on Commercial, Insurance, Employment and Insolvency law and bankruptcy.
