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Uchumi shares return to the NSE

NAIROBI, Kenya, May 31 – Uchumi shares made a low-key comeback to the Nairobi Stock Exchange (NSE) on the first day of trading on Tuesday. Two hours upon listing at the bourse the share fell by Sh5.10 from the opening trading price of Sh15.90.

The share however rallied in the course of the day to settle and close at Sh12.55.

Tuesday’s re-listing at the NSE marked exactly five years to the day the chain fell into insolvency and was subsequently suspended from trading on June 1, 2006.

Speaking at the re-listing ceremony NSE Chairman Eddy Njoroge said they would support Uchumi to ensure its shares are able to stabilise.

“In order to facilitate price discovery and allow for market forces to determine the price, the exchange will open the limits on the trading bands for the Uchumi Supermarkets shares,” Mr Njoroge said.

Upon its suspension in 2006, Uchumi shares were trading at an average of Sh14.50.

Mr Njoroge called on the government to speed up reforms on insolvency, bankruptcy regulations and implementation of the new Companies Act.

“We are convinced that these reforms will spur the growth of the private sector by making it easier for firms to emerge out of bankruptcy and insolvency,” he said.

Speaking to Capital Business on Monday Uchumi Chief Executive Officer Jonathan Ciano said an audit of its shares in 2008 valued them at Sh17.80.

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He also exuded confidence that given the company’s turnaround into a profit-making outfit, could see the share advance by as much as Sh6.50.

“Since then we have earned Sh863 million in profits and in 2008 shareholders and the government have injected Sh857 million. What we estimate is that every share price value has increased by not less than Sh6.50,” Mr Ciano said. 

Suntra Investment’s Managing Director Michael Gichohi told Capital Business that if all the attained growth and its prospects are factored, he foresaw it stabilising at Sh28 in the next three to six months.

He said the lifting of the Uchumi share suspension would stimulate the equities market, whose activity has been quiet.

"This is a major turnaround because investors are going to see that you can get a company out of receivership back into profitability and then back to the stock exchange. That will bring people to start looking for opportunities to more into such a company," Mr Gichohi said.

Also present, President Mwai Kibaki affirmed the re-listing as a testament of the resilience of Kenyan businesses.

“I am also encouraged that while under receivership, Uchumi turned around very successfully.  The turn-around of Uchumi Supermarket is a welcome development not only to the direct stakeholders but to our economy as a whole,” President Kibaki said.

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