French Development Finance Institution; Proparco has secured a 31.5 million United States Dollar (which is around 3.71 billion Kenyan Shillings) stake in Naivas Supermarket. The deal is part of a consortium which will now have a combined forty (40) percent ownership in the company.
Naivas Supermarket had recently made it public knowledge without disclosing specific details, that IBL Group, DEG and the sovereign wealth fund; Proparco would be taking a minority interest in the supermarket giant.
The group would be acquiring the stakes which were previously owned by Amethis, MCB Equity Fund, German sovereign wealth fund DEG, and the World Bank’s International Finance Corporation (IFC) who had acquired said shared back in April of 2020.
The new deal further highlights the increasing value of Naivas which continues to be a main attraction for private equity funds and investors who are interested in getting into the retail sector in Kenya at a time when one of the biggest giants in the sector fell and left a gap.
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Proparco made it known via a statement that, “Proparco is pleased to announce its partnership with IBL Group, the largest conglomerate of Mauritius [and] DEG … to jointly acquire a 40 percent interest in Naivas International, which owns 100 percent of the shares of Naivas Limited.”
According to the French Development Finance Institution; Proparco, capital contribution will be 31.5 million United States Dollars which will be around 3.71 billion Kenyan Shillings.
It is not however certain if the forty (40) percent stake will be divided equally among the three (3) institutional investors.
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The establishments involved have made it known that the acquisition is much more than the 6 billion Kenyan Shillings which Amethis, DEG and the World Bank’s International Finance Corporation (IFC) paid to secure a thirty (30) percent stake in the supermarket giant; Naivas.
For the German Development Finance Institution; DEG will be leaving its initial investment into Naivas Supermarket and returning as a shareholder and member of the new consortium.
What is not however known is if the World Bank’s International Finance Corporation (IFC) led consortium had acquired an additional ten (10) percent stake in the supermarket giant or if the family of the late Peter Mukuha Kago who is the businessman who founded Naivas, sold more shares along with those previously held by the institutional investors.
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If Proparco and the other members of the new consortium invested equal amounts it would mean that, forty (40) percent stake would have been secured at a cost of 11.1 billion Kenyan Shillings. If that guess turns out right, it would put Naivas’s current valuation at 27.8 billion Kenyan Shillings.
In 2020 the World Bank’s International Finance Corporation (IFC) led consortium’s stake acquisition into Naivas, valued the supermarket giant at 20 billion Kenyan Shillings. With its intensive growth across Kenya since 2020 till now, its worth has increased even further.
Although the first acquisition saw Naivas receive growth capital, the new deal means that the World Bank’s International Finance Corporation (IFC) led consortium will now be able to cash out from its two (2) year investment.
According to Naivas Supermarket, “We have adequate capital to fund our future expansion.”
IBL Group made it known that the new acquisition is the biggest transaction it has ever carried out.
In the words of IBL Group the multinational stated that, “The investment in Naivas International [the owner of the retail chain] is the biggest investment in IBL’s history.”
The World Bank’s International Finance Corporation (IFC) led consortium’s exit is a surprisingly brief investment duration for institutional investors. This is because those types of companies typically maintain investments for seven (7) or more years.
The IBL Group made it known that the new acquisition stake will make it possible for it carry out more investments in the East African region, stating that Naivas Supermarket has greatly increased its operations further cementing its claim as the largest Supermarket in Kenya.
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The Chief Executive Officer (CEO) of IBL Group; Arnaud Lagesse made it known via a statement that, “This family business created in 1990 is an example of a success story that has continued to grow despite the pandemic thanks to its strong business model.”
He added that, “With 84 outlets in 20 cities and towns across Kenya, it has put modern grocery retail within everyone’s reach. Naivas also contributes to the Kenyan economy, notably by employing over 8,000 people.”
According to the Chief Executive Officer (CEO), IBL Group has the proficiency within the retail sector as it also operates the Winners Supermarket chain in Mauritius.
Naivas Supermarket has in recent years, evolved into becoming one of Kenya’s biggest companies by employment as well as by sales.
It is projected that Naivas Supermarket will be closing the financial year which will end this month, with a total revenue of 860 million United States Dollars which is around 101.39 billion Kenyan Shillings. It aims to hit 1 billion United States Dollars which is around 117.85 billion Kenyan Shillings during the next financial year.
At the the time when the World Bank’s International Finance Corporation (IFC) led consortium bought into Naivas Supermarket the establishment had just sixty (60) stores.
The Supermarket used the cash generated from the buy in, to set up more branches and also take over the premises which were previously occupied by its competitors like Nakumatt Holdings and Tuskys which is owned by Tusker Mattresses Limited.
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The nearest rival to Naivas Supermarket in terms of sheer branch network is Quick Mart which is majority owned by Adenia Partners. As at April of 2022, Quick Mart had fifty one (51) stores. It has also been undergoing intensive aggressive expansion moves since it received investment from Adenia Partners which is a private equity company that focuses on Africa.
The Carrefour franchise which is backed by Majid Al Futtaim has a total of around sixteen (16) branches and posted substantial revenue of 33 billion Kenyan Shillings in 2021. Carrefour benefits from more spending power per shopper in the affluent suburbs where its branches are usually located at.
The Managing Director of Naivas; David Kimani made it known via a statement that, “This is an exciting partnership by our shareholders that will drive us to the next phase of growth. We appreciate the immense knowledge and capacity in the retail industry that IBL brings to the table.”
The French Development Finance Institution; Proparco made it known that Naivas Supermarket will go on with its growth in the current retail market across numerous structures, as it meets the needs of cuts consumers as the demand for food safety and food quality increases.
IBL Group’s purchase of a minority stake in Naivas signifies the further growth of its business model of conglomeration spreading across eighteen (18) countries.
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IBL Group which is listed on the Mauritius Stock Echange currently employs around 25,000 people with operations in energy, logistics, agriculture, distribution, hospitality, financial services, engineering, etc.
The IBL Group focuses on products, services and technologies that can reshape industries and expand the ability to provide customers with business solutions which synchronize the flow of goods.
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