The family of Peter Mukuha Kago, the founders of supermarket chain Naivas, has pocketed an estimated $32.29 million (Sh3.8 billion) from the sale of an 8.5 percent stake to a consortium of international investors in a transaction valued at Sh45.6 billion.
According to new disclosures, the family joined the International Finance Corporation (IFC), German fund DEG, and private equity firms Amethis and MCB Equity Fund in selling a combined 40% stake in the country’s largest supermarket for a record-breaking $151.97 million (Sh18.25 billion).
The transaction’s finer points were not disclosed during the June announcement.
However, the Mauritius-based conglomerate IBL Group, which led the purchasing consortium, has now revealed the terms of the recently concluded transaction, including the fact that the founding family sold an 8.5 percent stake.
The 8.5 percent stake is worth $32.29 million (Sh3.8 billion) based on the $100 million (Sh12 billion) price IBL disclosed for acquiring a 26.32 percent stake in the supermarket chain.
The Mukuha family’s fortunes contrast with those of others associated with family-owned supermarket chains that have either failed or are struggling to stay afloat.
After rejecting suitors, the Atul Shah family and Mukuhas’ relatives, owners of Nakumatt Holdings and Tuskys supermarket, respectively, missed out on billions of shillings in stake sales.
Cash-strapped Tuskys, whose branch count has fallen from 53 to less than seven, is struggling to stay afloat, while Nakumatt shut down in 2020 after failing to pay debts following a failed rescue attempt.
Mukuha heirs, including Martha Waithera, Grace Muthoni, and David Kimani, own shares in Naivas through the investment vehicle Gakiwawa Family, whose stake in the company has now dropped to 60%.
The IBL-led consortium, on the other hand, purchased a 40% stake in the company through an investment vehicle called Mambo Retail.
“On 10 August 2022, Mambo Retail acquired 40 percent stake in Naivas International, representing all shares previously held by Amethis Retail Limited and … part of the shares held by Gakiwawa Family,” IBL said in a circular to its shareholders.
DEG, IFC, and the private equity firms paid Sh6 billion for a 31.5 percent stake in Naivas through the investment vehicle Amethis Retail Limited in 2020, and the money was used to fuel the retailer’s growth across the country.
The transaction reduced the family’s ownership to 68.5 percent.
In June, the institutional investors announced an agreement to sell their entire stake to the consortium led by IBL.
According to the disclosures, institutional investors made large profits on their two-year short-term investment.
The firms paid Sh6 billion for the 31.5 percent stake and sold it for $119.68 million (Sh14.37 billion), more than doubling their money in two years.
IFC contributed $15 million, which equates to Sh1.8 billion at current exchange rates.
The new investors are bullish about the retail chain’s long-term prospects.
“IBL views the investment in Naivas International as a long-term strategic partnership, in line with IBL’s investment principles and strategic intent to establish a long-term presence in the East African region,” the multinational said.
“IBL focuses on sectors of strategic fit where it can contribute to equity partnership and actively support growth strategies by leveraging on its core operating capabilities.”
For IBL, the acquisition of a minority stake in Naivas marks the expansion of its conglomerate business model that spans 18 countries.
