A branch of the retail chain. Uchumi’s share performed well at the Nairobi bourse last year. Photo/File
What you need to know:
Filings with the CMA show that foreign investors owned 14.87 per cent of the retail chain in November compared to 7.57 per cent in June.
Uchumi shares have gained 155.9 per cent in the past year to the current price of Sh19.50, making it the best performing share among the 61 firms listed at the Nairobi Securities Exchange (NSE).
Foreign investors have nearly doubled their stake in Uchumi Supermarkets encouraged by the share’s star performance at the Nairobi bourse that has also attracted top investors like Evans Kidero and Jimnah Mbaru.
Filings with the Capital Markets Authority show that foreign investors owned 14.87 per cent of the retail chain in November compared to 7.57 per cent in June.
Uchumi shares have gained 155.9 per cent in the past year to the current price of Sh19.50, making it the best performing share among the 61 firms listed at the Nairobi Securities Exchange (NSE).
Dr Kidero, a former Mumias Sugar Company CEO, and Mr Mbaru, who owns Dyer& Blair Investment Bank, have also emerged in ranking of the top individual owners of the retail chain.
Rights issue
Mr Mbaru owns 756,989 shares worth Sh14.7 million while Dr Kidero owns 234,577 shares worth Sh4.5 million. The two are vying for the post of governor for Nairobi County.
“Investors are buying in Uchumi to participate in its rights issue that they expect will come at a good price,” said Brenda Kithinji, an analyst at the Standard Investment Bank.
She added that investors also expect Uchumi to perform better in the medium term, after making significant investments in branch expansion in the region in the past two years.
Increased interest in the stock comes at a time when the retail chain announced a dividend payout of Sh0.3 per share after a 10-year drought.
Uchumi, which closed shop briefly in mid-2006 after failing to pay creditors, has returned a profit for four years in a row compared to a loss of Sh1.2 billion in 2005, signalling that its turnaround strategy is working.
The firm declared the dividend despite its net profit dropping 29.8 per cent to Sh273.9 million in the year ended June, as sales jumped 29 per cent to Sh13.8 billion from Sh10.7 billion the year before.
The firm’s management said the declaration of the dividend is a show of confidence in its prospects underpinned by its expansion in the East African market.
Uchumi Supermarkets targets to raise Sh1.5 billion through a rights issue set to happen in the second half of this year, with the money expected to help it open more stores in strategic locations in the region.
The company’s massive share price rally is followed by BAT’s 101.6 per cent gain to Sh500 and Pan African Insurance’s 100 per cent rise to Sh40.25.
Foreign institutional investors have been the most bullish on Uchumi, nearly tripling their interest in the retailer from 12 million (4.55 per cent) in June to 34.1 million (Sh12.8 per cent) in November.
Domestic investors are rushing to join a number of local institutional investors whose long-term bet on Uchumi has paid off big time.
Companies that converted their debt to Uchumi Supermarkets shares have seen their investments nearly double since the re-listing of the retail chain at the NSE last year.
The suppliers, including Mumias Sugar, Brookside Dairies, New KCC, Bidco, Unga Limited, Mini Bakeries and Premier Bakeries, were offered 20 million Uchumi shares in last February to cut the debt by Sh200 million.
The shares were priced at Sh10 each, meaning these companies have seen their investments grow 95 per cent given Uchumi’s current share price of Sh19.5.
Mumias Sugar, for instance, was offered 2.21 million shares (0.84 per cent stake) for a Sh22.1 million debt. The worth of the shares stood at Sh43 million at current trading prices. Mumias earned a dividend of Sh664, 914 for the year ended June.
The debt swap, which saw the government become the single largest investor in Uchumi Supermarkets, was aimed at reducing the retail chain’s debt burden that had slowed its growth and delayed re-listing at the NSE.
The retail chain temporarily closed shop in June 2006 under the weight of debt prompting a government-led recovery that saw Uchumi’s return to profit in 2008 and resume trading at the NSE last year after a five-year absence.
