Jamii Bora ousts Treasury as top Uchumi ownerThursday February 26 2015
Jamii Bora Bank (JBB) has displaced the Treasury from the top position in Uchumi Supermarkets shareholding, setting the stage for a shakeup at the retailer’s board.
JBB together with Goodwill Ltd, an affiliate firm, now hold 15.19 per cent shares with the government owning 14.67 per cent.
The bank has been buying shares in the listed retailer since November 2014 when Uchumi was making a cash call that raised Sh1.5 billion, surpassing the Sh896 million target.
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Sources close to the deal said JBB and other large shareholders are eyeing board positions to give them the ability to implement new growth strategies for Kenya’s oldest chain which has been struggling in an increasingly competitive market.
JBB chief executive Samuel Kimani confirmed the bank’s inroads at Uchumi but declined to give further information on the strategy going forward. “We have bought shares in Uchumi but I cannot give more details because it is a listed company,” Mr Kimani told the Business Daily.
“That will depend on what shareholders agree.” Sources further said there are other large shareholders of the view that the board needs to reflect on the new ownership.
Khadija Mire currently chairs the board whose members are James Murigu, Bartholomew Ragalo and Mbatha Mbithi (who represents government-owned Industrial and Commercial Development Corporation).
ICDC has 1.997 per cent shares in Uchumi. Chief executive Jonathan Ciano declined to comment on the reportedly looming shakeup.
“I am afraid I cannot comment at the moment as this is a board matter that requires consultation,” Mr Ciano told the Business Daily.
The retailer’s share price has touched a two-year low of Sh8 and is currently trading at the Sh10 range. Uchumi closed shop in 2006 and suspended trading at the Nairobi Securities Exchange. The suspension was lifted in June 2011 after the Treasury and suppliers agreed to convert their debt into equity.
Uchumi had tottered after an ill-fated expansion amid poor management. It has now taken another stab at expansion but analysts say the management’s priority should be to boost its regional shops.
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“The company’s focus has remained on expansion despite the poor revenues being generated from subsidiaries due to teething problems being experienced. The company should redirect its focus on growing the already established branches in order to improve their revenues and hence aid in cutting their loan obligations,” said an analyst report by Genghis Capital.
In terms of stores Uchumi, with 37, falls behind Tuskys and Nakumatt which have 52 and 50 respectively. Naivas is not far behind Uchumi with a vibrant branch network of 31.
Eastmatt, Cleanshelf, Tumaini and Maathai are also expanding across major towns.