Uchumi Supermarket expects a Sh5 billion cash injection from an unnamed strategic investor in a transaction that could give the new owner near-complete control of the struggling retailer.
At the current valuation of below Sh900 million, collective shareholding among current shareholders, including the government, would fall by over 80 per cent.
The entry of big international retailers such as South Africa’s the Game and France’s Carrefour has significantly altered the playing field for Uchumi and other struggling local retailers.
Uchumi Acting Chief Executive Mohamed Mohamed Thursday told shareholders during the retailer’s annual general meeting in Nairobi that talks with the investor were ‘at a very advanced stage’.
“As the oldest retailer, we are an unrivalled brand legacy that a growing number of investors around the world are keen on using as an entry point into Kenya’s dynamic retail sector,” he said.
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The firm recently sunk deeper into losses in its most difficult year yet, in a period where it lost its flagship branches, including Nairobi’s Sarit Centre, from where it was evicted due to low stocks.
Mr Mohamed said the retailer was banking on the sale of its land in Kasarani to fund its recapitalisation amid delays in bringing the strategic investor on board. A depressed property market since early last year meant the retailer could not find a buyer for the Kasarani land that has previously been valued at between Sh2.3 billion and Sh3 billion.
Lean structure
The 20 acre-parcel in Kasarani has previously been the subject of fierce litigation after it was claimed by a private developer. Mohamed blamed last year’s lengthy electioneering period for both lower property valuations.
With the closure of several branches, the retailer projects that it would retain a lean structure and operate on a franchise model rather than open its own branches.
“Despite the very difficult context we face, Uchumi remains committed to weathering the storm and demonstrating our resilience, ability, and capacity to modify our strategy and adapt to a changing environment - ultimately emerging as a better business,” he said.
mmichira@standardmedia.co.ke
