SA’s Massmart looks beyond Naivas buyout with own stores

South African retail giant Massmart is looking beyond its buyout of Naivas Supermarket as it prepares to open shop in Kenya.

The retailer has been angling for a buyout to enter the local market, but on Friday said it was open to starting operations from scratch in Nairobi.

This comes amid uncertainty over the status of the purchase of the majority stake in Naivas after Massmart insisted that talks on the deal were on even as senior executives at the retail chain reckoned that it was off.

READ: Confusion stalks Naivas buyout talks with SA’s Massmart

Massmart has already booked space at the Sh12.6 billion Garden City Mall on Nairobi’s Thika Superhighway whose first phase is set for completion before December.

“The Massmart position is that we remain interested in investing in Kenya from both a green fields and an acquisition perspective,” said Massmart in an e-mail response to the Business Daily.

Massmart’s pursuit of the deal has triggered a feud at Naivas, where a family member has moved to court seeking to stop his siblings from selling a 51 per cent stake to the South Africa firm majority owned by Wal-Mart.

The South African firm has been angling for a buyout to enter the Kenyan market where dominance by local firms has acted as a barrier to the entry of giant foreign retailers.

Three of the dominant retailers — Nakumatt, Tuskys and Naivas — are family-owned, making them prime targets for acquisition.

READ: S. Africa’s Massmart widens talks beyond Naivas buyout

Tuskys shareholders are currently involved in a court battle for control, with some of the directors blaming the power struggle on outsiders engineering an aggressive takeover.

Nakumatt Holdings has been talking of selling a significant stake to a strategic investor to help support its expansion across East Africa.

It is owned by the Shah family and Hotnet Ltd, a company associated with former Kilome MP Harun Mwau.

Massmart earlier said that it was entering Kenya through its subsidiary Game.

The Johannesburg-listed firm, which Citigroup says is Africa’s third largest distributor of consumer goods, posted sales worth Sh530 billion, making it five times bigger than Kenya’s most profitable firm Safaricom on sales.

Citigroup has identified East Africa as the next growth frontier for huge retailers keen to cash on a growing middle-class and rising consumer demand, whetting the foreign investors’ appetite.

“I get one coming to see me once a week,” Mr Atul Shah, Nakumatt’s managing director told the Financial Times recently about equity investors who have been insistently knocking on their door seeking to buy a stake.

But the rising foreign interest has not translated into a tangible deal as owners of Kenya’s top retailers cling to their prized assets.