Supermarket chain Nakumatt Holdings has started talks expected to lead to sale of nearly a quarter of its shares to foreign equity investors.
Regional director for strategy and operations Thiagararajan Ramamurthy said Wednesday that the retail chain seeks cash to support its expansion in East Africa.
“There are quite a few global players very keen to partner with us and we are still at initial stages of discussions,” Mr Ramamurthy told the Business Daily Wednesday.
“Mr Atul Shah (Nakumatt’s managing director) will share when something crystalizes and is ready.”
The chain, which targets middle and upper income customers, has 40 branches in Kenya, Uganda, Tanzania and Rwanda, and hopes to open outlets in Djibouti, South Sudan and Burundi.
It is embarking on Sh1.2 billion ($14 million) expansion drive that will see the chain open eight new shops between October and February, as it eyes a 15.3 per cent growth in revenue.
Nakumatt is set to open four new outlets in Kampala, bringing its stores in Uganda to eight and an equal number in Kenya — pushing its outlets to 37.
“As a group we have hit gross revenue of over $650 million (Sh56.5 billion) in the year to February and we project about $750 million (Sh65.2 billion) for 2013-2014 year,” said Mr Ramamurthy.
The sales rank it the largest retailer followed by Tuskys and Uchumi, which reported revenues of Sh25.2 billion and Sh15 billion respectively last year.
Nakumatt, which was launched in 1965 but has been owned by Mr Shah’s family since 1978, has over the past decade been courted by South African retailers who were keen to reduce their reliance on the southern Africa market.
The retail chain had indicated in April last year that it would start talks from last June to bring on board fresh investors to the family-owned supermarket to help fund its expansion after hanging up on Sudanese billionaire Mo Ibrahim in 2009.
Analysts led by Citigroup have identified East Africa as the next growth frontier for global retailers and private equities eyeing retail business.
Nakumatt is currently owned by the family and Hotnet Ltd, a company associated with former Kilome MP Harun Mwau.
Mr Shah said earlier that the family would retain majority control of the retailer.
Nakumatt turned to commercial banks for funds after buy-out talks with a consortium led by London-based private equity firm Satya Capital collapsed. Satya Capital is associated with Dr Mo Ibrahim.
The supermarket management wants to attract equity investors rather than rely on costly bank loans, and does not intend to list on the Nairobi bourse in the short term.
The entry of the world’s biggest retailer, Wal-Mart, into Africa last year after it bought a 51 per cent stake in South African Massmart for $2.4 billion is expected to spur foreign investor appetite in the continent’s retail sector.
Massmart has said it will enter the Kenyan market after the completion of the first phase of Garden City, Kenya’s largest mall at 50,000 square-metres on Thika Superhighway, in December 2014.