Naivas founders set to pocket Sh5.8 billion from sale of additional shares to IBL Group

Naivas, the country's largest supermarket chain, is poised to undergo a change in ownership as the Mukuha family, its founders, prepare to sell an additional 11 percent stake in the company.

This deal, estimated at $41.7 million (Sh5.8 billion), will result in foreign investors taking controlling ownership of Naivas.

Currently, Naivas International Limited is owned by the Mukuha family and Mambo Retail which is the local investment vehicle for IBL Group, a Mauritian conglomerate.

A Naivas supermarket branch A Naivas supermarket branch Pulse Live Kenya

It is expected that the Mukuhas' share in the supermarket chain will drop from 60 percent to 49 percent if the deal is approved.

The foreign-owned consortium’s decision to buy additional shares is driven by Naivas' impressive profitability and market share growth.

“The proceeds of the subscription of shares will be utilised by Mambo Retail Ltd to acquire an additional 11 percent in Naivas International … the leading retail chain in Kenya which will result in Mambo Retail Ltd holding 51 percent of the shares in Naivas International Ltd,” IBL Group told its investors.

The supermarket made a profit of Sh2.1 billion in the nine months ended March 2023.

The Mukuha family's divestment strategy

The Mukuha family's investment vehicle, Gakiwawa Family Investments, has been gradually offloading its shares in Naivas.

In 2020, the Mukuhas sold a 31.5 per cent stake for Sh6 billion to a consortium comprising the International Finance Corporation (IFC), DEG, and private equity firms Amethis and MCB Equity Fund.

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This capital injection fueled Naivas' expansion across the country, resulting in a decrease in the Mukuha family's ownership to 68.5 per cent, but also an increase in the value of their remaining stake.

In 2022, the IBL-led consortium made further acquisitions by purchasing the 31.5 percent stake held by IFC and its co-investors for $119.68 million (Sh16.8 billion).

They also acquired an additional 8.5 per cent stake directly from the Mukuha family for $32.29 million (Sh4.5 billion).

These transactions valued Naivas at $379.9 million (Sh53.5 billion), making it one of Kenya's most valuable privately held companies.

A Naivas supermarket branch A Naivas supermarket branch Pulse Live Kenya

Naivas' dominance in the retail market

Established in 1990, Naivas has solidified its position as Kenya's largest supermarket chain, boasting over 84 stores and employing approximately 8,000 people as of June 2022.

Its success is even more remarkable when considering the challenges faced by its competitors, such as Nakumatt Holdings, Uchumi Supermarkets, and Tuskys, which succumbed to bankruptcy due to debt burdens and mismanagement.

Additionally, foreign players like Massmart and Shoprite from South Africa exited the market after struggling to gain a foothold.

Naivas, along with Carrefour and Quickmart, has continued to expand and dominate Kenya's formal retail sector.