Uchumi announced a 19 per cent profit drop on Friday. FILE
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Uchumi CEO Jonathan Ciano told Business Daily on Friday that the retailer has completed all the plans on its part for the rights issue.
The retail chain to use proceeds in opening another six branches by end of year.
Uchumi Supermarkets has set a June target to conclude its rights issue, with the retailer saying it is only awaiting the capital markets regulator’s approval.
The supermarket chain has been targeting to use the proceeds of the issue, expected to be at least Sh1.5 billion, in an expansion drive that will see it add six branches to its portfolio by the end of the year.
Uchumi CEO Jonathan Ciano told Business Daily on Friday that the retailer has completed all the plans on its part for the rights issue.
“We are looking to conclude it before the end of our financial year in June. Everything is ready except the final approval from the Capital Markets Authority (CMA),” said Mr Ciano. The rights issue had been widely anticipated to take place by the end of last year.
Uchumi is yet to disclose the offer price but it is normally a six-month weighted average share price plus a discount or premium. The share was trading at Sh18.10 on Friday, having touched a high of Sh24 in the past one year.
Uchumi’s rights will be sold across Kenya, Uganda, Tanzania and Rwanda, where the retailer has cross-listed.
The chain cross-listed on the Rwanda and Uganda stock exchanges in October and November 2013 respectively but cross listing on the Tanzanian bourse is awaiting regulatory approval.
In Uganda, the transactions will be handled by UAP Financial Services, in Tanzania by Rasilimali Limited while in Rwanda it will be Faida Securities Rwanda, a subsidiary of Faida Investment Bank Kenya which is the lead transaction adviser.
Mr Ciano earlier said that Uchumi would determine the percentage of shares to be made available in each country once the transaction advisers assess the appetite for the shares.
Uchumi released its results for the six months to December 2013 on Friday, posting a 19 per cent year on year drop in profit to Sh106.9 million.
The supermarket chain attributed the slowdown in the Kenyan retail market to reduced consumer spending due to austerity measures instituted during the general elections and implementation of devolution, as well as rising inflation.
The supermarket plans to use the proceeds of the rights issue in expansion when other supermarket chains have ramped up their plans in a market share war.
Uchumi borrowed Sh300 million from the Industrial and Commercial Development Corporation in the fourth quarter of last year to keep the expansion drive going in light of the delay in issuing the rights issue.
“The supermarket is facing competitive pressure from existing players such as Nakumatt, Tuskys, Naivas and other retail chains, which have grown much faster, opening more branches in the suburbs reducing the need for customers to go into large malls for their basic products,” said Standard Investment Bank in a note on the retailer’s half-year performance.
Kenya’s top retailers are preparing for fierce competition with the expected entry of cash-rich global retailers such as South Africa’s Massmart, which have indicated were eyeing a majority stake in Naivas.
Tuskys recently took over three Ukwala outlets in Nairobi and wants to open small shops in locations like petrol stations to grow sales.
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