Botswana retailer registers Kenya unit ahead of entry

Botswana supermarket chain Choppies Enterprise has opened a Kenyan subsidiary ahead of a planned entry into the local retail market through an acquisition.

Choppies has disclosed in its pre-listing statement at the Johannesburg Stock Exchange (JSE) that it has registered a dormant subsidiary in Kenya for future operations.

The revelation by Choppies comes after it announced its expansion plans into Kenya, Tanzania and Zambia.

The supermarket is listed on the Botswana Stock Exchange. The firm said it has been attracted by the low development of Kenya’s formal retail market, estimated at about 30 per cent penetration.

“Dormant companies have been established in each of Zambia, Namibia, Tanzania and Kenya, for the intended future operations in these jurisdictions,” reads the pre-listing statement.

“The constitutional documents of these companies are standard form documents and have not been tailored for the operations of Choppies.”

The supermarket’s secondary listing on May 27 on the JSE anticipates to raise an estimated Sh4.6 billion ($48 million) for expansion and to clear outstanding debt.

Choppies has a market capitalisation of Sh50 billion ($520 million). It reported revenue of Sh48 billion ($501.2 million) last year. The Kenyan subsidiary called Choppies Enterprises Kenya Limited, whose registration number is 2015/179092, was incorporated on February 20.

The retailer lists Parin Bharatkumar Patel and Birju Pradipkumar Patel as stakeholders with 75 per cent shares held in the local general retail unit.

Choppies said it was assessing an entry strategy into Kenya, which it added that may include an acquisition of existing stores in order to establish a footprint and platform for growth.

Choppies becomes the third global retailer to expand to Kenya after French Carrefour and South African Massmart Supermarket. Massmart initially wanted to acquire, Naivas — a family owned supermarket chain — but failed in its bid.

READ: Supermarket chains vie to unlock Kenya retail market

New York Stock Exchange-listed research firm Nielsen in March ranked Kenya as Africa’s second largest formalised retail economy after South Africa in a consumer report that studied five sub-Saharan African economies.

Investment opportunities in the formal market have attracted a lot of activity in the retail sector.

Local investors like CleanShelf Supermarket and Maithai Supermarket have also taken advantage of the vibrancy to expand to estates Nairobi.