Naivas Supermarket, the fast-growing Kenyan retail chain, has signed a deal to sell a 30% stake to Paris-based private equity fund, Amethis Finance, for an undisclosed amount.
The cash injection is expected to enhance Naivas’s expansion strategy that has seen it open 60 branches across the country. Meanwhile, bringing on board external investors will also help it fine-tune its corporate governance and management, which have dogged other retailers such as Nakumatt, Choppies, and Uchumi.
“Having an experienced investor with us will further strengthen the business,” Naivas Managing Director David Kimani said in a statement.
It is this expectation of big money that may have emboldened Naivas to bid higher for the acquisition of Nakumatt’s assets early January, splashing Ksh422 million.
The retailer now owns six Nakumatt stores valued at almost five times their worth. Amethis first reached out to Naivas over a year ago, and will be the first external investor in Naivas. Naivas said the investment by Amethis will help it expand operations.
A stake in Naivas is the latest Amethis investment in Kenya. The fund has over the past decade invested in Ramco, KenAfric and the now-defunct Chase Bank. The deal will give Amethis a foothold in Kenya’s growing retail market as well as a platform to expand the East African region.
“In a Kenyan retail landscape where many competitors from abroad are settling in, we are proud to support a very successful Kenyan business that has a strong understanding of the Kenyan consumer,” Jean-Sebastien Bergasse, a partner at Amethis, said in the statement.
If all goes according to plan, Naivas will be big – and richer – and ready to do battle with its longtime rival Tuskys and Carrefour, the newcomer on the scene. Tyson Limited values Nakumatt Mega, Prestige, Lavington, Kisumu, Embakasi and Nakuru at Ksh110.5 million. Nakumatt will use proceeds from the transaction to pay off creditors.
Naivas Ltd now occupies Nakuru, Lavington, and Prestige, purchasing the furniture, fixtures, and fittings and negotiated new terms with the landlords, who had closed the doors on Nakumatt which found itself in the red.
In 2019, the retail sector recorded average yield of 7.8% in comparison to the office and residential sectors with 7.5% and 5.0%, respectively, with markets such as Westlands and Karen offering relatively high returns of up to 10.3%.