Uchumi engages growth gear with proceeds from rights issue

Uchumi Supermarkets Limited will use proceeds from its oversubscribed rights issue to open 14 new branches in the next one year.

The retail chain’s chief executive officer, Jonathan Ciano, said on Wednesday that seven of the new outlets would be in Kenya and the rest would be spread across Uganda, Tanzania and Rwanda.

“All the money that was raised will be used to grow the business locally and in the region. We are just starting operations in Rwanda, which, we believe, will grow into one of our most important markets,” Mr Ciano said.

The rights issue was oversubscribed by 83 per cent, raising about Sh1.6 billion against a target of Sh896 million.

Mr Ciano said the money would be used to fund regional expansion and refurbishment of old outlets.

“We are delighted to be here this day, celebrating the success of one of our hardest undertakings since the rebirth of this company. I would say that conducting the rights issue was a more daunting task than resuscitating Uchumi,” Mr Ciano added.

He spoke on Wednesday as the company’s new shares started trading on the Nairobi Securities Exchange. The addition of 100 million new shares brings the company’s total trading shares to 365 million and raises its market capitalisation to Sh3.7 billion.

National Treasury Cabinet Secretary Henry Rotich presided over the bell-ringing ceremony at The Exchange building in Westlands.

He said the government would continue supporting Uchumi in a bid to regain its market leadership position.

Uchumi’s planned expansion comes at a time when the local retail sector has registered increased interest from foreign investors, with American retail chain giant Walmart set to open shop this year through its South African affiliate Mass Mart.

Giant French chain Carrefour has also announced plans to enter the Kenyan market this year.