Choppies acquires 10 Kenyan retail stores
Isaac Pinielo | Tuesday June 2, 2015 14:11
Group chief executive officer, Ram Ottapathu confirmed that the retailer has partnered with a Kenyan company by the name Shanta Retail holdings Limited backed by the directors of Export Trading Group (ETG).
“Shanta Retail will be 25 percent shareholders in Choppies Kenya and Tanzania and they will contribute 25 percent equity and debt proportionately,” he said.
A statement from Choppies yesterday announced that the group, which operates 125 stores in Botswana, South Africa and Zimbabwe, has entered into a conditional agreement with Kenya’s Ukwala Supermarkets to buy its assets and business name.
The purchase consideration will be funded from debt and from existing cash resources.
The transaction is in line with the group’s strategy of expanding into new markets in sub-Saharan Africa. It stated target is to operate over 200 stores across at least six countries by December 2016.
The statement further noted that the transaction provides the company with an immediate footprint of established stores and a platform from which to grow in Kenya.
Three of the supermarkets are located in the country’s capital Nairobi, two in Nakuru and five in the port city of Kisumu, the third largest city in Kenya. Ukwala is a recognised and well-regarded brand in the Kenyan market and the stores will trade as Choppies Ukwala supermarkets.
Choppies will operate with a 25 percent local partner in Kenya in terms of the joint-venture agreement with the promoters of ETG, the leading agricultural commodities trading and logistics business, which is long-established in the region.
“The implementation of the transaction is subject to approval of the Competition Authority in Kenya and other relevant regulatory approvals,” reads the statement.
The statement indicated that the purchase consideration represents less than five percent of Choppies’ market capitalisation.
Choppies’ primary listing is on the BSE while its secondary listing is on the JSE. In its pre-listing statement on the JSE, the retailer named Parin Bharakumar Patel and Birju Pradipkumar Patel as shareholders of the Kenyan subsidiary.
The retailer’s mode of expansion has always been acquisition and the use of local suppliers, which it said has been successful.
It added that it has been attracted by the low development of Kenya’s formal retail market, estimated at about 30 percent penetration.
Choppies entered Zimbabwe two years ago through the acquisition of 10 Spar stores.