Seal of approval as Uchumi rights issue is overshot by 83 per cent

The Uchumi supermarkets rights issue was oversubscribed by 83 per cent equivalent to Sh1.6 billion against a target of Sh896 million, the regional retailer said Tuesday in a statement.

“We are overwhelmed by the level of confidence our shareholders have demonstrated over the period of the issue despite a false start. This is a seal of approval by the market in the company’s direction and as management we promise that the funds will be put into projects that will continue to create more value to our shareholders,” said Mr Jonathan Ciano, the Uchumi Supermarket chief executive officer.

He said in a phone interview that buyers of the Uchumi rights were evenly spread, adding that “the retail investors played a key role.”

The rights issue saw Uchumi sell 99 million ordinary shares at a discounted price of Sh9 each.

The money raised through the cash call will be used to fund its expansion and refurbish the existing branches.

READ: Ciano increases his Uchumi stake by 200,000 shares

The retailer has announced plans to open two branches in Kigali and another one in Musanze, Rwanda, early next year. The three outlets will have a combined staff of 400.

“We expect to refurbish eight branches that will cost us (about) Sh200 million,” Mr Ciano told the Business Daily in an earlier interview. Faida Investment Bank was the Lead Transaction Advisor on the issue.

“Uchumi’s current market levels provide a compelling investment opportunity for both institutional and individual investors.

‘‘The participation of these investors in the rights issue and the level of oversubscription is a ringing endorsement of Uchumi’s future and of Kenya’s retail sector as a whole,” said David Mataen, Faida Investment Bank Director for Corporate Finance.