Uchumi’s first cash call since 2006 to open in November
Posted Wednesday, September 4 2013 at 19:51
- Uchumi is seeking to build a war chest to fund local and regional expansion as competition heats up.
Uchumi Supermarkets will open a Sh1.5 billion rights issue in November, marking its first cash call since the 2006 Madaraka Day collapse.
The retailer is seeking to build a war chest to fund local and regional expansion as competition heats up.
The firm on Wednesday said it will offer 100 million new shares at a price to be announced later, to roll out new outlets and take on rivals Nakumatt, Tuskys and Naivas who have been expanding aggressively.
The company has already applied to the regulators and is awaiting approvals from the Capital Markets Authority (CMA) and the Nairobi Securities Exchange.
“The information memorandum was approved by the board on Monday and we have already forwarded it to the CMA,” said Jonathan Ciano, the Uchumi chief executive.
“According to our timetable, the rights issue is slated for November, latest December,” he said.
The additional funds will help Uchumi — which has a total of 30 outlets in Kenya, Uganda and Tanzania — grow its existing network and enter the retail market in Rwanda, Burundi and South Sudan.
Mr Ciano said the retailer will open two more stores in Tanzania and three in Rwanda in the next two years as it studies the feasibility of the South Sudan market.
Uchumi announced it will fund, from its internal resources, the opening of five new branches in Mombasa, Juja, Maua, Syokimau Railway Station and Kisumu by December this year.
It further plans to set up shop in Thika, Kiambu, Western Kenya and a second branch in Meru by the end of next year.
Uchumi’s sales grew marginally by 3.2 per cent to Sh14.3 billion in the year to June ranking it Kenya’s third largest retailer behind Nakumatt and Tuskys, which grossed Sh56.5 billion and Sh25.2 billion respectively in revenues last year.
Its net profit was up 31 per cent to Sh357 million as at June compared to Sh273 million a year earlier helped by lower finance costs and a tax credit.
Faida Investment Bank, the lead transaction advisor for the rights issue, is yet to disclose the offer price but it is normally a six-month weighted average share price plus a discount or premium.
Uchumi closed shop in 2006 shortly after a controversial Sh1.3 billion rights issue, then seen as aimed at covering its mismanagement.