Choppies Supermarket is set to continue its expansion in to the African markets as it seeks to purchase 10 supermarkets in Kenya valued at almost P100 million (US$10 million).
The chain store, which originated in Lobatse in 1986, is listed primarily in the Botswana Stock Exchange (BSE) and recently acquired its secondary listing in the JSE.
Currently, Choppies has 125 stores in Southern Africa, comprising 72 stores in Botswana, 35 in South Africa and 18 in Zimbabwe and is targeting to operate 200 stores at least in six countries by December 2016.
The acquisition in Kenya would mark the first entrant in East Africa, where Kenya, with a GDP growth forecast of 6.9 per cent in 2015 and 7.2 per cent in 2016 according to the International Monetary Fund (IMF), is the regional power economic power house.
Information from Choppies states that the purchase of 10 Ukwala supermarkets provides it 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,” the company states.
It is said the stores would trade as Choppies Ukwala supermarkets. Choppies Supermarket Kenya Limited is to have a majority of 75 per cent while a local company has 25 per cent.
It is stated that Choppies Supermarket Kenya would buy the assets and the business name, subject to final due diligence and inventory valuation. “The purchase consideration will be funded with debt and from existing cash resources,” it is stated.
Recently, Choppies entered the JSE by listing on the Food Retailers and Wholesalers sector on its main board effective May 27.
The company placed 277 420 758 shares at an offer price of R4.90 and total value stood at R1 359 million. “Based on a total of 1 291 658 341 Ordinary Shares outstanding at the Listing Date, the Offer price implies a total market capitalization for Choppies of R6 329 million.”
