Ciano increases his Uchumi stake by 200,000 shares

Uchumi CEO Jonathan Ciano has increased his shareholding in the NSE-listed retailer by nearly 200,000 units, signalling a vote of confidence in the supermarket chain whose performance has wavered in recent months. Mr Ciano’s stake in Uchumi rose by 182,200 units in the past one year to a total of 518,379 shares, the retailer’s latest annual report shows.

Four other Uchumi directors also increased their individual shareholding of the retailer, which could be an indicator of either their bullish expectations of the retailer’s future performance or their belief that the share price could rise even further.

“I bought the shares around September this year during a small window when the regulator allows us to make the purchase,” Mr Ciano told the Business Daily in an interview. “I believe that the stock is highly undervalued given the supermarket’s positive outlook,” he added.

Uchumi recently had a public spat with its suppliers who were complaining of mounting debts owed to them. Its share had also sank below the rights issue price of Sh9, before rising to an average close of Sh9.15 on Friday. The current share price is however still less than half the one-year high of Sh23.

READ: Uchumi three-for-eight rights issue opens

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Mr Ciano has publicly claimed that some people, which he did not disclose, were manipulating Uchumi’s share price to buy the stock on the cheap. The retailer is targeting Sh896 million through the ongoing rights issue.

Mark of confidence

Mr Ciano’s shares at Uchumi are currently valued at Sh4.7 million. Chief executives and directors of Nairobi Securities Exchange (NSE) listed companies have in recent years increased their stakes in the companies they head, which is seen as a mark of confidence in future prospects of their firms.

Mr Ciano first bought Uchumi’s stock in 2009, a year before the retail firm’s receivership status was lifted. His latest purchase saw him spend approximately Sh2 million since the shares were at the time trading at about Sh11 a piece.

Other directors who have increased their shareholding at the retail chain include James Murigu who now has 100,000 shares as of June this year valued at Sh915,000, up from 24,327 held previously. Mr Murigu is an independent director at the retail chain and a former managing director of Suntra Investment Bank.

Uchumi’s chairperson Khadija Mire has also increased her Uchumi shares from 2,900 last year to 19,600 as of June 2014 while Bartholomew Ragalo – another independent director – made his maiden purchase of 34,812 shares. These stock purchases by the directors come on the backdrop of lean times for Uchumi, which reported a 7.6 per cent drop in full-year profit to Sh384 million in the full-year to June 2014.

The retailer plans to open four branches in Kenya, three in Tanzania and one in Uganda between now and June next year, an expansion plan that will bring their outlet count to 45.

The rights issue which will see 99 million new shares sold at the ratio of three-for-every-eight held started last Monday and will close on November 28.

The supermarket’s management has had to resort to a media blitz -- including by the government which is a shareholder of the chain -- to market the cash call.

The price of an ordinary Uchumi share at the Nairobi Securities Exchange at one time dropped to Sh8, one shilling cheaper than the rights issue price, raising fears that some investors might shy away from buying them.