A Tuskys Supermarket outlet. Tuskys is looking to offload majority stake to pay suppliers.

Tuskys is looking to offload majority of its stake to pay suppliers following the loss of goodwill that has led to halting of supplies which in turn has led to empty shelves at the once indomitable chain.

The retail chain is seeking to sell its stake to a consortium comprising of a private equity firm and an international retailer for an undisclosed fee.

If the deal goes through, it will alleviate some pressure from Tuskys which is under surveillance from the Competition Authority of Kenya (CAK) for defaulting on supplies running into billions of shillings and not being transparent about it.

The deal will also mean Kenya will have an influx of foreign companies owning the largest supermarkets in the country.

Naivas recently raised more than Ksh1.5 billion from a consortium of investors, including the International Finance Corporation (IFC), the private equity wing of the World Bank and private equity firm Amethis for expansion.

Quickmart which has spread its wings across Kenya within a short time is backed by private equity funds. This makes it hard for local retailers to compete with their cash flush peers.

“The shareholders of Tuskys have communicated that they are also exploring other funding options, including seeking a strategic investor by July 31, 2020,” the CAK said in a statement Monday.

The regulator said that should an investor apply to acquire a significant stake in the retailer, the review of such a filing will be fast tracked.

“The Authority took note of these initiatives and has thereof committed that, if the retailer opts to seek a strategic investor, the Authority shall within 14 days, and in accordance with the provisions of the Competition Act, consider and issue a determination upon submission of a merger/acquisition application,” the CAK said.

A transaction adviser tapped to guide Tuskys on the deal observes that the family-owned retail chain is seeking to sell a majority stake to a PE firm and a supermarket operator.

“The discussion is around a majority stake and we are looking at PE fund together with an operator of a major supermarket,” the Business Daily reported on Tuesday.

Besides much needed capital injection, the retailer will also benefit from technical expertise which has been non-exsistent at the family owned business founded by the late Joram Kamau.

Troubled Retailer

Last week, the New Kenya Cooperative Creameries (New KCC) halted milk supplies to Tuskys over defaulted payments running into millions of shillings.

This was after the retailer exceeded its credit payment period of 60 days.

CAK has already ordered Tuskys not to pay its directors a dime without approval.

CAK moved in to make sure that Tuskys honours its obligations to suppliers who had called for intervention from the state stating they were yet to be paid despite the retailer under-reporting the amounts it owed suppliers in its communication to the regulator.

Before that, the regulator had been investigating Tuskys’ bank accounts over the Ksh1.2 billion the retailer owes suppliers.

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