The government is set to let go its shareholding in Uchumi Supermarkets #ticker:UCHM once the troubled retailer stabilises under the ongoing bailout and restructuring plan.
Trade Principal Secretary Chris Kiptoo on Wednesday said the shareholding exit will come after the government recoups taxpayers’ funds invested in the company over the years.
Uchumi is in talks with a strategic partner to pump in fresh capital after years of struggle supported by the Treasury bailouts and debt restructuring.
“We are not planning to stay for so long as shareholders of Uchumi, so once it stabilises then we will move on to something else and let it grow on its own. Our focus is simply to see the retailer back in full operations and that all stakeholders are taken care of,” Mr Kiptoo said in an interview.
The government owns a 14.67 per cent stake in the loss-making Uchumi and is the second-biggest shareholder behind Jamii Bora, which controls 14.90 per cent of the retail chain.
Uchumi last year survived a winding-up suit and is currently banking on a Sh1.8 billion Treasury bailout package of which only Sh500 million has been released.
The targeted strategic investor is expected to pump in Sh3.5 billion to help Uchumi restock its shelves and pay supplier debts and bank loans.
“We are not adding our shareholding and we are very keen on due diligence before we disburse funds to Uchumi so that it does not get drowned again. We have a team carrying out compliance checks to assure us when we can release the next Sh1.3 billion,” Mr Kiptoo said.
He said the retail sector, which contributes up to 8 per cent of the Gross Domestic Product, had been weakened over time by poor self-regulations, shoddy management and lack of transparency by the privately-owned supermarkets.
Uchumi, which had resorted to asset sales to ease its cash position, putting up for sale the Ngong Road branch, Lang’ata Hyper store, and a 20-acre plot in Kasarani, was declared insolvent in May 30 2006.