French and German agencies buy minority stake in Naivas

Amethis is offloading its stake to Mambo Retail, a company registered in Mauritius and owned by IBL Group of Mauritius together with Proparco, a subsidiary of AFD, and the German Development Corporation (DEG), owned by KfW.

The three companies have joint control of Mambo Retail and have lodged an application with the Comesa Competition Commission seeking approval to buy the Amethis stake in Naivas.

"The acquiring undertaking, Mambo Retail, is a special purpose vehicle incorporated under the laws of Mauritius which will be jointly controlled by IBL Ltd, Proparco and DEG," said the Comesa Commission in a July 21 notice.

"The target undertaking, Naivas, is an investment holding company incorporated under the laws of Mauritius which wholly owns Naivas Ltd (Naivas Kenya), a grocery retail company incorporated under the laws of Kenya."

The deal will also include Monvid Insurance Agency Ltd, which is controlled by Naivas Kenya.

Amethis acquired an undisclosed stake in Naivas in 2020. A recent report by Reuters said the company had acquired a 30 per cent shareholding in the retailer.

In a June statement announcing its exit, the private equity firm said the Mukuha family would remain in control.

The family started Naivas as a shop in Nakuru's Rongai area in the early 1990s and over time grew it to being a retail giant, although with its share of family feuds and differences.

"The deal...sees the Mukuha family continue holding majority control," said Amethis after the firm reached agreement to sell its stake in the retailer to the IBL-led consortium.

The private equity firm said it had in the course of the two years been able to strengthen governance at Naivas, particularly its middle management.

"On top of the geographical expansion, Amethis has also supported the development of a strong middle management layer in the group, with numerous hires to better control growth and risk across different segments (such as) IT, e-commerce, category management, environmental and social functions," it said.

Governance has been the Achilles' heel for the local retail industry and, according to analysts, has partly led to the fall of giants such as Nakumatt, Tuskys and Uchumi.

Amethis said it assisted Naivas to grow the number of its retail outlets. Naivas has over 80 outlets, making it the largest retail chain in Kenya.

"In the course of our investment period...Naivas has been able to consolidate its position and expand with its total number of outlets growing from 60 to more than 84 stores today," said Amethis. "The group has also added about 1,700 new employees, and increased its impact in the communities at large."