12 December 2012

Kenya: Uchumi Shareholders Okay EA Bourse Plan

UCHUMI has said it will contact capital markets of Tanzania, Uganda and Rwanda in January seeking approval for listing of its shares in these countries after shareholders yesterday endorsed the move.

At the retailer's 32nd annual general meeting held yesterday in Nairobi, CEO Jonathan Ciano urged shareholders to support the move. The firm wants to cross list at the Uganda Securities Exchange, Dar-es Salaam Stock Exchange and the Rwanda over the counter market. "Our shares are very much on demand," Ciano told the AGM.

Aside from the cross listing, the board has also been given the go-ahead by shareholders to raise an additional Sh1 billion through a rights issue whose date is yet to be determined.

Though finer details of the rights issue are yet to be determined, presentations made at the AGM indicate that Uchumi will likely offer the shares at a ratio of one for every two held, to its existing investors.

The target for the issue has been set at Sh1.5 billion and will go towards increasing its capital and fund expansion projects. Uchumi said it has started market studies in Rwanda and South Sudan with a bid to determine viability before making the decision to expand into these countries.

"Management went to Rwanda and we are thinking that we will go into partnerships with certain investments perhaps next year," said Ciano.

Shareholders asked the management of the firm to expand cautiously to avoid a repeat of the events that led to the collapse of Uchumi in 2006.

Then, it was said, the firm expanded too fast sometimes into some areas with no commercial sense leading to its financial woes. "Our focus is growth not expansion. We shall go into areas that make commercial sense," said Ciano.

The shareholders also endorsed a Sh0.30 dividend payout which is the first in ten years. But even so, some expressed disappointment arguing that the dividend given was too low.

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