Nakumatt takes bank loans to finance Yako Supermarkets buyout

Nakumatt Supermarkets has taken loans from four commercial banks to finance its expansion plans, which recently saw it acquire a Western Kenya-based retail chain.

Atul Shah, Nakumatt managing director, Tuesday said Diamond Trust Bank, Standard Chartered, Kenya Commercial Bank and Bank of Africa helped to bankroll its recent acquisition of Yako Supermarkets.

Nakumatt received regulatory approval to acquire Yako’s three stores in Kakamega, Bungoma and Busia, stepping up competition for its rivals Tuskys, Naivas and Uchumi.

“The money to acquire the three Yako outlets came from borrowings from our four banks,” said Mr Shah in an interview.

He, however, declined to disclose the value of the loans, its split among the banks or the purchase price for Yako. The relatively unknown retail chain belongs to Sudhir Khetia, a businessman with interests in property development and retail.

Nakumatt, which was instructed by the Competition Authority to retain Yako’s 283 employees, is renovating the three outlets ahead of next month’s re-opening.

“We are currently modifying the three Yako outlets to bring them to our standards. We expect to open the first one sometime in mid-November,” said Mr Shah.

READ: Nakumatt snaps up 3 Yako Supermarkets stores in western Kenya

Devolution and improving economic climate have raised the standard of living in counties, increasing disposable incomes and attracting retail chains away from the big towns.

Naivas Supermarket, a family-owned retail chain, last week announced plans to open a branch in Bungoma, raising competition for shoppers in western Kenya.

The retail chain, the third-largest in the country by revenue, also plans to open an outlet in Ukunda, again putting it in a direct competition with market leader Nakumatt.

“We are currently expanding into promising counties. In the case of Yako, an opportunity for a takeover presented itself and we took it,” said Mr Shah.

Nakumatt, which already has a presence in Kakamega, is putting the final touches to its first Kericho branch which Mr Shah says will open by the end of next month.

The retail chain has over the years acquired several retail chains and set up stores from scratch to grow its branch network, using internally generated funds and bank loans.

In 2013, it acquired three stores belonging to South Africa’s Shoprite in Tanzania. Earlier in 2010, it bought four stores in Nairobi’s central business district from rival Woolmatt Supermarkets.