South Africa’s Absa Group Limited is set to spend Sh30.9 billion to raise its ownership in Absa Bank Kenya to 85 percent from the current 68.5 percent, marking the latest mega deal in the country’s banking sector.
The multinational is offering a premium price of Sh34.5 per share to the company’s minority investors, underlining its confidence about the lender’s future outlook.
The Nairobi Securities Exchange-listed firm has significantly raised its profits and dividend payouts while improving returns on shareholders’ funds since it separated from its former ultimate parent firm Barclays Plc in 2020.
Absa Group now intends to buy a total of 895.9 million shares in its local subsidiary in a transaction that will boost its ownership to 4.61 billion shares from the current 3.72 billion shares.
The proposed offer price comes after Absa Bank Kenya’s share price had rallied to hit an all-time high of Sh33 before easing to close at Sh29.4 on Thursday.
The multinational’s offer represents a 28.2 percent premium to the target firm’s 180-day weighted average price, with acceptances to be received from June 30 until August 11.
Upsizing stake
Absa Group says it intends to retain the Kenyan subsidiary’s listing on the Nairobi bourse on completion of the deal and has sought an exemption from the Capital Markets Authority (CMA) from making a full buyout offer to all minority shareholders.
“Absa Group proposes to acquire up to an additional 895,989,600 ordinary shares in Absa Kenya representing no more than 16.5 percent of the issued share capital of Absa Kenya through a tender offer,” the Johannesburg-based firm says in its offer.
“The price payable for each ordinary share tendered will be Sh34.50 and represents a premium of 20.0 percent, 18.9 percent and 28.2 percent to the 30, 90 and 180 trading days volumes weighted average prices. The offer price represents an implied price-to-earnings multiple of 8.2 times for the financial year ended December 2025.”
Absa Group’s upsizing of its stake in Absa Bank Kenya signals bold confidence in the local subsidiary’s enterprise, whose dividend per share has been on an upward trajectory ever since the rebrand from Barclays.
Absa Bank Kenya’s return on equity (RoE), the metric that determines a company’s profitability by measuring how much profit it generates from shareholders’ capital, has risen steadily from 16.4 percent in 2019 –the year before it completed its separation from Barclays.
That metric rose to peak at 24.5 percent in 2024 before moderating to 22.8 percent in 2025.
Net earnings meanwhile surged from Sh7.4 billion in 2019 to Sh22.9 billion last year while dividends increased from Sh6 billion to Sh11.1 billion over the same period.
Through this proposed upsize of its stake, Absa Group is looking to book in higher earnings from its Kenyan subsidiary, whose growth has been partly unlocked from the separation from Barclays.
The British multinational previously set the risk appetite for the South African multinational (then trading as Barclays Africa Group Limited), which in turn cascaded the policies to different subsidiaries, including the Kenyan unit.
After the split, the reporting line for the Kenyan business stopped at the South African firm, which is keen to grow in the African continent.
Absa Group says the proposed increase in its stake in the Kenyan subsidiary aligns with its broader strategy around Africa expansion and presenting its clients with strong regional and global opportunities.
“The proposed acquisition through this tender offer is a natural extension of the group’s commitment to build a diversified pan-African franchise,” the multinational said.
“Absa Group regards East Africa as a cornerstone of its pan-African growth ambitions. Absa Group’s strategy is to deepen presence in high-potential markets, improve returns through scale and enhance corridor capabilities connecting clients to regional and global opportunities.”
Expansion drive
The South African firm has been on a regional expansion drive ever since Kenny Fihla assumed leadership on June 17, 2025.
In early June 2026, Absa Group received the green light from the Bank of Uganda to acquire Standard Chartered Bank’s Wealth and Retail business unit, paving the way for consummation of a deal whose processes started in October 2025.
The proposed increase in the South African lender’s stake in its Kenya subsidiary comes as another South African bank, Nedbank Group, is in the process of acquiring a 66 percent stake in Kenya’s NCBA Group.
Kenya’s banking sector is currently undergoing recapitalization with players expected to reach Sh10 billion by way of core capital by the close of December 2029, a deadline that Finance Bill 2026 proposes to extend by three years to December 2032.
