Uchumi to sell prime city properties to raise capital

The Capital Markets Authority has approved the sale of Uchumi Supermarkets’ assets in Nairobi as the retailer steps up efforts to raise funds to pay suppliers and finance operations.

The retailer on Thursday said it had also included its Lang’ata property among the assets earmarked for sale. The other prime property that Uchumi intends to sell is its flagship Ngong Road hypermarket. “The Capital Markets Authority has given approval for the transactions to proceed subject to ratification by Uchumi shareholders at an annual general meeting,” said Uchumi yesterday in a statement.

“The Ngong Road property covers about 2.5 acres of land while that on Lang’ata Road lies on roughly 3.7 acres of land. The properties will be sold through an open tender system with the bidding process closing on October 30, 2015,” added the statement.

The retailer has signed up the Nairobi law firm, Coulson Harney, to oversee the transaction.
Both properties will be sold on a sale-and-leaseback basis. “The business needs the cash to finance the ongoing rebranding and restocking of all our stores as well as meet our operational requirements,” said Uchumi chief executive officer Julius Kipng’etich.

Thika Road Mall directors are said to be have shown interest in acquiring some Uchumi Supermarkets’ assets. The retailer had earlier said that it had resulted to selling its assets since it could not go back to the shareholders having recently conducted a right issue that raised Sh896 million, which its former executive officer Jonathan Ciano said would be used to refurbish old stores based in Nairobi and to finance its expansion.

Uchumi Supermarkets has been relying heavily on borrowing from commercial banks in Kenya to finance its operations after years of loss-making that have been blamed on poor management.  The board in a reorganisation recently hired the current executive officer from Equity Bank and the chief operations officer Willy Kimani from rival retail chain Naivas.