East African Supermarket Chain Uchumi plans rights issue in Uganda

Current and potential investors on the Uganda Securities Exchange are set to have more investment options to choose from now that Uchumi Supermarkets is in advanced stages of acquiring approvals to cross-list on the local bourse.
If cross-listed, Uchumi will be the eighth Kenyan company to cross-list on the USE from the Nairobi Stock Exchange (NSE).

The Kenyan-based retail store which is listed on the Nairobi Stock Exchange applied for regulatory approvals from the Capital Markets Authority (CMA), Uganda, according to a source familiar with the developments and the regulator is working round-the-clock to have it approved soonest.

The move to cross-list will provide local investors with an opportunity to own a share in the retail store’s portfolio of investments.

CMA officials neither confirmed nor denied the reports, saying the authority does not comment on any applications that are in the pipeline before approval due to policy reasons.
A source, however, said the retail store will cross-list any time this year once the paperwork being examined by CMA is complete.

UAP Financial Services, Uganda are the sponsoring brokers while the local transaction advisor is not yet known.
It is reported that the retail store which has outlets in Kenya, Uganda and Tanzania also plans to cross-list on the Dar es Salaam and Rwanda bourses this year as it moves to raise more resources to fund its expansion plans.
The shares will trade on the USE, the Dar es Salaam Stock Exchange and Rwanda Stock Exchange over-the-counter market.

The cross-lists will be followed by the issuance of a rights issue to raise a larger pool of capital to finance its expansion plans.
Uchumi plans to enter the South Sudan and Rwandan retail markets and also open new outlets in Kenya, Uganda and Tanzania.

The Kenyan media quoted the company’s managing director Mr Jonathan Ciano saying that a region rights issue seeks to raise about Shs42.9 billion (KShs1.5 billion) for the 100 million new shares at a discounted price of about Shs429 (KShs15).
Shareholders are said to have approved the rights issue and cross list at the company’s Annual General Meeting in December last year.

The Uchumi rights issue is the second call on shareholders since 2005 when the retailer raised KSh1.27 billion to finance its ill-fated expansion in 2006.

29 AUG 2013