Businessman John Harun Mwau has sold his 7.7 per cent minority stake in Nakumatt Supermarkets ahead of the retail chain’s plan to take on board a new shareholder with deep pockets to pull it out of a bourgeoning debt crisis.
It was not immediately possible to establish the price at which Mr Mwau sold his shares, but the deal is estimated to be worth billions of shillings going by recent valuations of the retail chain.
Nakumatt managing director Atul Shah said three years ago that the retail chain was valued at $400 million (Sh40.7 billion) – meaning Mr Mwau has pocketed more than Sh3.19 billion for the stake.
Sources familiar with the transaction said the shares bought from Mr Mwau are part of the 25 per cent stake that the retail chain is selling to a strategic partner expected to come on board before the end of the year.
Mr Mwau’s exit comes at a time when Nakumatt has been sailing in turbulent waters, partly arising from a more than tripling of its debt to Sh15 billion in February 2015 from Sh4.2 billion in 2011, piling pressure on operations and resulting in long payment delays to suppliers.
With 42 outlets in Kenya, the retailer is majority owned by the Shah family (92.3 per cent) and Hotnet Ltd — a company associated with Mr Mwau.
Nakumatt, which is Kenya’s biggest retail chain with 61 stores across East Africa, announced that talks with the potential partner were at an “advanced stage” and would be finalised in a matter of weeks.
South African rating agency GCR said in a note dated December 17, 2015 that the deal would see substantial capital injected into the business, a feat that would markedly ease funding pressure and facilitate the planned rollout of new branches.
Nakumatt’s plan to sell a large stake to a strategic investor was first mooted in 2009 when a consortium of investors led by London based private equity fund Satya Capital — associated with Sudanese billionaire Mo Ibrahim — expressed interest in retail chain, but the deal fell through.