Uchumi seeks to cross-list on East Africa stock exchanges

Uchumi Supermarkets has applied to cross-list its shares on the other three East African stock exchanges, which could give the retail chain more visibility in the 130-million people market.

The company’s CEO Jonathan Ciano on Friday said the retail chain had applied to the capital market regulators of the Uganda Securities Exchange, Dar-es-Salaam Stock Exchange and the Rwanda Stock Exchange.

Rwanda operates an over-the-counter market. Of the five members of the East African Community, only Burundi is yet to set up a stock market.

“We have applied in Kampala, Dar es Salaam and Kigali for the cross-listing. This is something we are now implementing. So we are awaiting approvals,” said Mr Ciano in an interview.

With Mr Ciano at the helm, the supermarket chain has been expanding both locally and in the region in the past few years, having recovered from near collapse some seven years ago.

The company plans to open new outlets in Kenya, Uganda and Tanzania and also move into retail markets in South Sudan and Rwanda.

(READ: Uchumi steps up expansion with second Dar store)

Eric Musau, a research analyst at Standard Investment Bank, said the cross-listing on the three other exchanges is likely to help the company to raise more cash in rights issues as it offers exposure to more investors in the region.

Already, the company is planning to raise Sh2 billion in a rights issue approved by shareholders in the annual general meeting held last December.

In order to mobilise the cash, the company is to expected create over 100 million new shares.

“Cross-listing will help the company’s shares to be more liquid. At the same time, it can help it when it comes to raising funds in a rights issue,” said Mr Musau.

The move is expected to have more citizens from the other three countries become shareholders as they can buy directly from their bourses in their local currency without having to travel or make orders through the Nairobi Securities Exchange.

Transaction advisor and lead sponsoring broker for the rights issue and cross-listing is Faida Investment Bank. Faida’s chairman Bob Karina had earlier said the rights issue was set for the end of the year.

“The company has not decided firmly on how much in total they would like to raise. As we get closer to the issue we will watch the market and see where the price is, then we will give the actual price,” said Mr Karina.

Transaction advisory partners in Uganda, Tanzania and Rwanda have also been appointed.

In Uganda, the transactions will be handled by UAP Financial Services, in Tanzania by Rasilimali Limited while in Rwanda it will be Faida Securities Rwanda, a subsidiary of Faida Investment Bank Kenya.

The funds from the rights issue will be primarily used to fund expansion and refurbishment of existing branches as it marks a shift from dependence on retained earnings to finance capital expenditure.