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Capital Markets

Nakumatt valued at Sh34bn, says MD

From left: Nakumatt Holdings managing director Atul Shah, regional director Thiagarajan Ramamurthy, Diamond Trust Bank CEO Nasim Devji and Mastercard East Africa vice president JamesWainaina during the launch of the Nakumatt Global Prepaid Smart Card at Thika Road Mall recently. Photo/FILE
From left: Nakumatt Holdings managing director Atul Shah, regional director Thiagarajan Ramamurthy, Diamond Trust Bank CEO Nasim Devji and Mastercard East Africa vice president JamesWainaina during the launch of the Nakumatt Global Prepaid Smart Card at Thika Road Mall recently. Photo/FILE  Nation Media Group

The Nakumatt Supermarket managing director has said the retail chain is currently worth Sh34 billion ($400 million), valuing the business at nearly seven times the size of Uchumi based on its market capitalisation of Sh5.6 billion.

Atul Shah said in an interview published by the Financial Times that Nakumatt’s valuation has risen two-and-a-half times from about Sh13.6 billion ($160 million) four years ago, indicating the rapid growth of Kenya’s retail sector in recent years.

“The valuation is about $400 million,” confirmed Mr Shah in an interview Thursday with the Business Daily.

Nakumatt is seen as Kenya’s biggest retail chain by sales. Valuing the five big retailers has however been difficult as all of them except Uchumi are privately held enterprises that do not publish their financial statements.

Mr Shah says Nakumatt’s annual turnover is about Sh55.3 billion ($650 million), compared to Uchumi’s annual sales of Sh14.36 billion.

Nakumatt’ worth of Sh34 billion means it would have cost potential strategic investors about Sh8.5 billion to acquire the planned 25 per cent stake sell-off of the retailer.

The plans to offload a 25 per cent stake to a strategic investor were derailed by the Westgate terror attack, when gunmen from the militant group Al-Shabaab stormed the high-end mall killing at least 67 people, including three of the chain’s staff.

Mr Shah did confirm though that the planned sale of the stake is still on at a future date. Nakumatt said it lost more than Sh2 billion worth of stock in the attack, furniture fittings and business opportunity after its premises at the mall was gutted by fire.

A deal mooted in 2009 to sell the 25 per cent stake to a consortium of investors led by London- based private equity fund Satya Capital failed to materialise.

Satya Capital is associated with Sudanese billionaire Mo Ibrahim. The supermarket management wants to attract equity investors rather than rely on costly bank loans, and has plans of listing on the Nairobi bourse in the future.

Nakumatt has also eyed acquisition of other supermarket chains as part of its growth strategy. In 2010, it acquired Woolmatt for an undisclosed amount, gaining a larger share of the CBD market, and at the same time moving to replace the footprint of its Downtown branch lost in a fire tragedy in 2009.        

“We’re open to anything if the opportunity is good,” said Mr Shah on the prospects of buying out a rival going forward.

The chain opened a new store in Uganda on October 12 and plans to open two more in Kenya and three in Uganda by February next year, as part of a region wide expansion drive targeting to have 65-70 stores by 2015.

The chain has 40 branches in Kenya, Uganda, Tanzania and Rwanda, and hopes to open outlets in Djibouti, South Sudan, Ethiopia and Burundi.

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