Botswana retailer invests US$20m to enter SA market

BOTSWANA – Sefalana Holdings will invest about P200 million (R250 million, US$20 million) in a consortium for acquisition of supermarket and wholesale chains in South Africa as part of the BSE-listed retailer’s expansion plans.

In a statement, the company said the largest participant in this consortium is the well-established buying group, Unitrade Management Services (Pty) Limited (UMS).

“The objective of this consortium will be to acquire a number of target supermarket and wholesale chains across the country. Sefalana is due to invest R250 million in this consortium and will participate in the board of the consortium.

The two groups look forward to leveraging off one another’s experience in the industry to grow this consortium into a sizable enterprise over the next 10 years,” Sefalana Group finance director, Mohammed Osman said.

The UMS is an independent management services group, offering a franchise solution to large FMCG independent traders in retail, wholesale and hybrid store format.

With over 150 members in South Africa and the region, UMS combines the buying power of the independent traders in Southern Africa to help members get better deals to get the edge over competitors.

Sefalana expects the investment to generate a return that will significantly increase the profitability of the group.

The transaction is subject to a number of regulatory and procedural matters expected to be concluded by end of October 2017, added Osman.

Sefalana already operates in Namibia and Lesotho and the addition of new stores in South Africa rivals that of its strongest local competitor, Choppies which now operates in eight African countries.

Sefalana says its recently acquired subsidiary in Lesotho

has contributed significantly to the topline accruing revenues of P155 million in the first six months of trading.

Presenting their financial results for the year ended April 30, 2017, Sefalana managing director, Chandra Chauhan said the mountain kingdom’s market has a lot of potential and they are currently exploring other sites in Maseru for additional store opening.

Sefalana operates three Hyper Stores, 25 cash and carry shops and 22 retail shops that trade under the Shoppers brand.

Sefalana entered the Lesotho market last November through the takeover of the country’s largest Cash ’n Carry outlet, TFS Wholesalers, which is located in Maseru.

Currently, Sefalana has about 51 stores in Botswana and 23 retail outlets with the Kanye one being the latest.

The group also has plans to open two more stores in Mogoditshane this financial year.

The retailer currently has 14 stores in Namibia.

Sefalana also has operations in Zambia where it indicated that its property was fully let throughout the half-year period and that it continues to generate a very good rental stream.

On their property portfolio, Chauhan said Botswana performed well contributing about 18% to the group’s profit before tax.

In the last year, the group has also managed to secure property in Keetmanshoop in Namibia, where they intend to build a new store this financial year and also have identified a prime location to house their Namibian Head Office and Cash ’n Carry.

Mmegi

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