Uchumi to sell 100m shares in rights issue

What you need to know:

The stock has gained the most this year at the NSE and as at the close on Friday; it had appreciated by one and a half times compared to Sh7.70, its closing price as at the end of last year.
Uchumi said it will seeking approval from its shareholders in its upcoming annual general meeting next month to increase its share capital by Sh1 billion
The company now has a total of 24 branches, of which 19 are in Kenya while 4 are in Uganda.

Uchumi Supermarkets has announced plans to sell 100 million shares through a rights issue, adding to the growing number of listed and private firms that are tapping Kenya’s capital markets for funds.

The supermarkets chain Friday said it will cross-list its shares in Uganda and Tanzania and will seek approval from its shareholders in its upcoming annual general meeting next month.

Uchumi is looking to increase its share capital by Sh1 billion through the creation of 200 million shares.

The company, whose shares were allowed to start trading at the Nairobi Securities Exchange (NSE) at the end of May last year after a five-year suspension said in a statement that it would ask its shareholders to allow it to offer the new shares to existing shareholders at a price that it will determine.

At the same time it said that it will also ask its shareholders to authorise it to “…register and cross list the company’s shares on the Uganda Securities Exchange, the Dar es Salaam Stock Exchange and the Rwanda over the counter market…”.

In 2005, Uchumi Supermarkets sold 120 million shares in its first ever rights issue at Sh10 which managed to attract Sh1.269 billion, an oversubscription of six per cent.

Standard Investment Bank said that the money raised will likely be used for expansion in its regional subsidiaries.

Uchumi Supermarkets currently has 265.42 million shares issued and the stock the closed at an average price of Sh19.20 on Friday meaning that its value stands at Sh5.09 billion.

The stock has gained the most this year at the NSE and as at the close on Friday; it had appreciated by one and a half times compared to Sh7.70, its closing price as at the end of last year.

Last month, the supermarkets chain said that its profits after tax for the full year ended June this year dropped by 29.83 per cent to Sh273.97 million from Sh390.42 million as at June 2011.

Its sales revenue and gross profits grew by Sh3.078 million and Sh791 million respectively compared to mainly due to the opening of the five new branches during the year.

It opened a hyper branch in Dar-es-Salaam at the Quality Mall, a branch on Gulu and another in Kabalagala and a third by the Freedom City Hyper on the Kampala - Entebbe road in Uganda and one at the Taj Mall Hyper branch in Nairobi.

The company now has a total of 24 branches, of which 19 are in Kenya while 4 are in Uganda.