CAK approves acquisition of minority stake in Naivas by French PE fund

KENYA – The Competition Authority of Kenya (CAK) has approved acquisition of a minority stake in Kenyan retail chain Naivas by French private equity fund Amethis Finance.

Amethis has made the acquisition alongside its partners DEG, MCB Equity Fund and IFC, a member of the World Bank Group.

The watchdog while approving the acquisition directed the merged entity to honour all current contracts made by Naivas with local suppliers besides payment of all exiting debts.

The approval sets the stage for the continued expansion by Naivas as it seeks to grow its footprint across the country in the fight for market share in an increasingly competitive market.

“The Competition Authority has authorised the proposed transaction as set out herein on condition that the merged entity to honour all the current contracts with suppliers for the duration of those contracts,” said CAK in a gazette notice.

“The merged entity to ensure that prior to implementation of the proposed transaction, all the reconciled and agreed outstanding debts owed to its suppliers are paid to the extent permitted by the contracts entered into between the parties.”

It is not clear how much Amethis has injected into Naivas and get in return but historical data shows that the fund typically invests between Sh1.1 billion (US$10m) and Sh4.4 billion (US$43m) or more in target firms for about 30 percent of stake.

This investment, the fourth of Amethis Fund II, will support the strategy implemented by the family owned business towards the emergence of a national leader in the retail sector.

“We look forward to working jointly with the shareholders and management team to further expand the business’ operations and store network and keeping at the same time a strong Kenyan identity,” said Jean-Sebastien Bergasse, Partner at Amethis.

Naivas aims at continuously improving its supply chain, developing its private label segment and strengthening relationships with suppliers.

The group will then be able to consolidate its position and to further expand with new openings in the country.

“We are very excited about this partnership. As we embark on our next phase of growth, having an experienced investor with us will further strengthen the business”, said David Kimani, Managing Director of Naivas.

With 60 outlets, the retailer recently acquired Nakumatt’s six stores in a deal estimated to be over Sh400 million marking its move to take over the market previously controlled by the defunct Nakumatt and Uchumi amid increasing competition from international retailers like Carrefour and Game.

Other deals by the French equity firm are minority acquisitions in printing and packaging firm Ramco Plexus in 2014, confectionery maker KenAfric in 2016 and Mozambique’s largest integrated wheat and maize miller, Merec Industries in 2018 which earned them recognition at the prestigious Africa Food Industry excellence awards.

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