By John Njiraini

About 12,000 Uchumi Supermarkets shareholders can finally unlock the value of their shares after the retail chain returned to the Nairobi Stock Exchange (NSE).

Five years after it was put under receivership following years of mismanagement and loss making that resulted in suspension from the market, Uchumi’s 265,426,614 shares started trading again at the NSE on Tuesday, opening at an offer price of Sh14.50.

The share price then dropped to Sh10.65, before averaging Sh12 for the better part of the day, although volumes remained relatively low during the first day of trading.

Start of trading

"The re-listing of Uchumi is a worthwhile gift to our country, as we mark the 48th Madaraka Day tomorrow (Wednesday)," said President Kibaki while presiding over the ringing of the bell to signify start of trading.

The re-listing of Uchumi marked the culmination of a successful turnaround that saw the chain emerge from the jaws of insolvency and receivership, to report profits for three consecutive years at the heartland of the country’s retail sector.

Retail chains like Nakumatt, Tuskys, Ukwala and Naivas have been reigning supreme. Even though Uchumi was indebted to the tune of Sh1.2 billion when it was declared technically insolvent on May 31, 2006, Wednesday it rode on the back of a Sh865 million after tax profit for the year ending June 30, last year.

Repaid loans

The company has also repaid loans owned to secured creditors – KCB Bank and PTA Bank – besides suppliers, landlords and former staff, while part of the credit owed to the Government has been converted to equity, making the State the single largest shareholder with 13.4 per cent stake. The Government shareholding increases to 20.37 per cent when stakes held by the Kenya Wine Agency and ICDC are included.

The Government has made it known that it does not plan to hold onto the huge shareholding, and will soon offload some stakes to the public.

Finance Minister, Uhuru Kenyatta, said numerous reforms are ongoing to make the capital markets and the wider financial sector more efficient and stable to enable the country achieve Vision 2030 blueprint.

The capital market is expected to play a crucial role in providing opportunities for raising capital for infrastructure investment. Uhuru said for the economy to grow at 10 per cent, equity and bond market capitalisation must increase from 50 per cent and 16 per cent to 90 per cent and 30 per cent of GDP next year.

Focusing on currency

Uhuru said plans are ongoing to establish a futures market focusing on currency, minerals and energy derivatives.

"The benefits will impact all sectors of the economy by addressing the current volatility of prices of commodities such as fuel," he said.

Other ongoing reforms include demutualisation of the NSE to enhance governance, introduction of a Treasury Bond index, and reduction of equity settlement period from four days to three days to increase liquidity in the market.