Nakumatt eyes sale of stake by mid next year, says head of strategy and operations

Mombasa Senator Hassan Omar (right) is taken on a tour of the newly opened Bamburi Nakumatt branch in Kisauni by the retail chain’s Managing Director Atul Shah.

Nakumatt Holdings, East Africa’s biggest retail chain by outlets, expects a ‘strategic’ investor to buy a stake by mid-2015 as it looks to expand in the region, the head of strategy and operations said.

The company, with annual sales of $600 million (Sh54 billion), has held talks with at least two ‘serious investors’ who have shown an interest in partnering with Nakumatt, Thiagarajan Ramamurthy said in an interview on Friday.

The company said in August it plans to sell a 20 per cent stake after announcing last year it’s seeking to raise as much as $50 million (Sh4.5 billion) in a possible partnership with other retail chains. “We are looking for both a financial and strategic investor to partner with,” he said. “We are currently assessing the right partner and the deal should be through by mid-next year.”

Kenya, East Africa’s biggest economy, is expected to grow 5.7 per cent in 2015 and 6 percent the year after, compared with 5.1 percent this year, according to a Bloomberg survey of economists published on November 21. The retail industry in East Africa is ‘attractive’ because of its rapid population increase, urbanization, macroeconomic stability and growth potential, A.T. Kearney, the Chicago-based consulting firm, said in March.

Nakumatt competes with Uchumi Supermarkets Ltd, the biggest publicly traded retailer, and closely held Tuskys and Naivas Ltd. Wal-Mart Stores’ South African unit, Massmart Holdings Ltd, said in August it’s met ‘several important players’ in Kenya’s retail industry as it seeks to expand on the continent.

Listing Plans

Ramamurthy declined to identify the investors Nakumatt has spoken to and wouldn’t say how much the company plans to raise. “The talks are still under discussion,” he said.
Nakumatt has 7,000 employees and 38 branches in Kenya. It also has operations in Uganda, Tanzania and Rwanda and plans to expand into South Sudan and Burundi.

The company is also considering trading its shares on the Nairobi Securities Exchange by the end of the decade, he said. “We plan to list in the Nairobi Securities Exchange most probably in 2020,” said Ramamurthy.

 —Bloomberg