The cash will be raised through either equity, convertible debt or a combination of both.
“The directors are hereby authorised to identity and negotiate with any suitable investor to raise any sum up to a maximum of Kenya Shillings five billion by way of debt capital through the issue of convertible debt instruments or by way of equity capital by way of private transfer of shares in Uchumi to the investor or a combination of both options,” read a section of public notice for the Annual General Meeting expected to take place in January on Wednesday.
“The investment shall be on terms determined to be suitable by the directors of Uchumi and tabled for ratification by the shareholders at the next annual general meeting (subject to any required regulatory approvals),” the notice read.
The move comes at a time when the retailer has been carrying out a restructuring plan which has seen it replace top management, close some outlets and re-negotiate contracts with suppliers.
The retail chain, which was once the largest in Kenya, has lost market share over the years as new entrants joined the market.
The strategic investor is expected to support the retailer’s plans to recover its position in the market.
“The nominal share capital of the Company be and is hereby increased from Kenya Shillings five billion (Sh 5,000,000,000) …….. to Kenya Shillings ten billion (Sh10,000,000,000)…,” the company said as one of the plans to be approved by the shareholders come January.
Nakumatt, which is the leading retail chain by revenue, has consistently identified prime locations and partnered with other retail stores in order to stay ahead of the market.
Tuskys and Naivas, both of which target low end segments, have primarily succeeded on the back of aggressive marketing, product bundling and high foot traffic locations
Following its 3Q14 rights issue which raised Sh 895.8million, Jamii Bora Bank became the largest shareholder at 15.7percent stake relegating the government which has 14.6percent stake, to second place.
“Given that Kenya remains one of the best retail markets in Sub-Saharan Africa, with retail penetration at about 30percent, we think the move opens up opportunity for international retailers to gain entry into the market,” Standard Investment Bank Research commented on Uchumi’s move.