Billionaire Philip Ndegwa family expands its empire with new deals

The move by NCBA Group and ICEA Lion Group to consolidate the ownership of their insurance and property businesses respectively has signalled a new round of expansion of the Philip Ndegwa family’s multi-billion shilling business empire.

NCBA Group, in which the Ndegwas hold the leading stake at 14.94 percent, last week announced plans to buy an additional 66.67 percent in AIG Kenya Insurance Company Limited from an American multinational.

ICEA Lion Asset Management Limited, which is majority-owned by the family, is also in the process of buying out retail investors in property fund ILAM Fahari I-Reit, in a deal that is valued at Sh402.4 million.

Read: Philip Ndegwa firm to buy Sh402m stake in property fund

The two buyouts are the latest in a series of deals involving firms in the family’s diversified portfolio, which straddles manufacturing, real estate, logistics, insurance and banking.

The family’s strategy over the years has been defined by selling struggling assets and pursuing mergers and acquisitions in sectors with high-growth potential.

The AIG Kenya deal, which will earn American Insurance Group (AIG) at least Sh2 billion based on the most recent valuations of the local subsidiary, will see NCBA end up with 100 percent of the issued shares of the insurer.

The value of the majority stake was estimated at Sh2 billion at the end of December 2022 based on NCBA’s valuation of its existing 33.33 percent ownership in the local insurer at Sh1.028 billion.

ILAM, which manages Fahari, has offered to take the leading role in buying a total of 36.58 million units (shares) as part of a plan to transform the fund into a restricted Reit and delist it from the Nairobi Securities Exchange (NSE).

The Ndegwas, one of Kenya’s richest families, have seen firms in which they hold a significant stake take part in some of corporate Kenya’s biggest deals, running into billions of shillings in value, in recent years.

The deals include the acquisition of additional shares in NCBA Group, which was created from the 2019 merger of the former NIC Group, in which they held a quarter of the shares, and the former CBA Group.

The Ndegwas through their investment vehicle First Chartered Securities have recently raised their stake in the bank to 14.94 percent from an estimated 12 percent at the time of the merger.

Between the end of 2021 and July this year, the holdings of NCBA shares under First Chartered went up by 39.95 million shares to 246.15 million units, which have a present value of Sh9.35 billion.

This has seen them overtake the Jomo Kenyatta family —which holds a 13.2 percent stake in NCBA— to become the bank’s top shareholder.

The financial services firm ICEA Lion Insurance Holdings has also seen its fair share of deals, which have included the 2020 acquisition of asset manager Stanlib Kenya from South Africa-based insurer Liberty Holdings at more than Sh1.5 billion.

The Stanlib acquisition saw ICEA’s asset management arm inherit from Stanlib the role of managing property fund Stanlib Fahari I-Reit, which was renamed to ILAM Fahari I-Reit.

In the same period, the insurance holding company raised Sh2.4 billion from the sale of a 24.1 percent stake to private equity firm Leapfrog Investments.

The family’s deal activity started in early 2015 when it sold its agriculture and hospitality equipment company G-North & Son Limited to businessman Paul Wanderi Ndung’u for an undisclosed sum.

Later that year, they sold the ICEA Building in Nairobi’s central business district (CBD) to Jomo Kenyatta University of Agriculture and Technology for Sh1.8 billion, with the property subsequently renamed JKUAT Towers.

In 2016 and 2017, the family sold Ennsvalley Bakery to Unga Group in two tranches totalling Sh535 million. The family holds 50.03 percent in the miller. The bakery business suffered soon after the purchase, forcing Unga to write off a significant part of the amount it had invested in the acquisition.

In 2018, the family backed a bid by Unga’s second-largest shareholder—Delaware-based conglomerate Seaboard Corporation—to buy out Unga Group’s minority shareholders and delist the miller from the NSE.

Read: Ndegwas buy an extra Sh315 million NCBA stake

The plan was thwarted after some of the small shareholders refused to sell to Seaboard, denying the multinational the 75 percent target it needed.

The minority investors argued that Seaboard’s offer of Sh40 per share undervalued the miller by a large margin.

→ (email protected)