Foreign investors step up pursuit of Uchumi shares

Shoppers at an Uchumi outlet in Nairobi. FILE 

By NEVILLE OTUKI

In Summary

• Filings with the Capital Markets Authority show that foreign investors owned 34.96 per cent of the stores in November compared to 28.74 per cent in September and 7.57 per cent in June 2012.
• Analysts say investors expect Uchumi to perform better in the medium term after making significant investments in branch expansion.

 

Foreign investors have stepped up their pursuit of Uchumi Supermarkets, encouraged by future retail earnings, as locals continue to reduce their ownership.

Filings with the Capital Markets Authority show that foreign investors owned 34.96 per cent of the stores in November compared to 28.74 per cent in September and 7.57 per cent in June 2012.

The share, which was the top performer at the Nairobi bourse in the 12 months to March, has remained static over the past six months.

Uchumi’s sluggish share has seen local shareholders who had bought the stock on the cheap cash in, especially high-net worth investors whose stake stood at 29.1 per cent in November from 37.6 per cent in March.

Some of the institutional investors that have exited the retail chain include Kenya Wine Agencies which in October sold its 4.23 per cent stake for nearly Sh240 million.

The stake held by retail investors stood at 35.9 per cent in November, from 41.6 per cent in March, as foreign high-net worth investors increasingly pursue more of the shares.

Uchumi’s share has shed 9.76 per cent over the past three months to Sh18.95, a period that has seen the Nairobi bourse’s market index gain three per cent.

Branch expansion

Analysts say investors expect Uchumi to perform better in the medium term after making significant investments in branch expansion.

The retailer will open 13 new stores before next June and refurbish some of its 25 existing outlets. The chain has stores across east Africa where fast-expanding economies are creating a growing middle class with disposable incomes.

READ: Uchumi signs property lease for entry in Rwanda market

Uchumi’s profit grew 20.4 per cent to Sh485.9 million in the year to June on rising sales, which stood at Sh14.2 billion up from Sh13 billion a year earlier.

East Africa’s retail market has attracted interest from foreign investors keen on taking advantage of the region’s economic growth.

This is what is attracting foreign investors to Uchumi even as they make a bee-line to negotiate a stake in Nakumatt and Naivas. Nakumatt is looking to sell a significant stake to a strategic investor to help fund its expansion plan.

“I get one coming to see me once a week,” Atul Shah, MD of Nakumatt, recently told the Financial Times of the stream of fund managers and private equity investors keen on acquiring a stake in the nearly 50-branch supermarket chain.