KENYA – Tumaini Self Service Limited, one of the emerging supermarket chains in Kenya has sold a majority stake to Sokoni Retail Kenya in a recent consolidation drive in the space.
The transaction which has been approved by the Competition Authority of Kenya (CAK) provides the retail chain with capital to expand its business.
The nod by the market watchdog gives Sokoni, a company incorporated in Mauritius on 23 August 2018, a controlling stake in the upcoming retail firm.
Details of the financial transaction have not been publicized but Tumaini is a good catch in the retail space, with annual turnover estimated at US$1.95 million (Ksh200 million) from its six branches situated in the capital city Nairobi,according to Kenyan WallStreet.
“Pursuant to the provisions of section 46 (6) of the Competition Act, 2010, it is notified for the general information that in the exercise of powers conferred upon the Competition Authority by section 46 (6) (a) (ii) of the Competition Act, the Competition Authority has authorized the proposed transaction as set out herein,” said CAK’s director general Wang’ombe Kariuki in a gazette notice.
In a statement, the company said: “Sokoni has come on board, as a strategic investor, to assist Tumaini achieve its goal of becoming a leading retailer in Kenya.
“Tumaini will begin an expansion plan to meet growing demand for retail goods and services in convenient locations in Nairobi’s estates and neighbourhoods.”
Surge in investments and foreign ‘invasion’
While some other chains are finding it difficult to survive the turbulences brought by low consumer spending, uncertain economic times and re-emergence from a political uncertainty, the retail sector is attracting significant investment, with the emergence of foreign retailers.
In 2015, Botswana’s Choppies made a bold step in the country by acquiring a 75% stake in struggling Ukwala Supermarket stores for US$9.75 million (Ksh1billion).
Some of the local chains are locked in heavy debts which they used in ‘ambitious’acquisition, expansion and new venture drive.
For instance, Nakumatt and Uchumi supermarkets have been forced to scale down operations after aggressive operations in Kenya, Uganda and Tanzania.
Taking advantage of the woes faced by its peers, foreign retailers have made daring steps into the sector, with South African retailer Shoprite being the latest to open another store in the country.
French retailer Carrefour, which entered the Kenyan market in 2016 opened its sixth store, taking up the space previously occupied by struggling retailer Nakumatt.
These entries show that Kenya is still a promising spot for retail investments, benefiting from rising middle-class purchasing power and robust macroeconomic growth.