Nakumatt Tanzania has sold a 51 per cent stake at an undisclosed value to a company known as Ascent Investment Limited. The retail chain recently announced that it is seriously in need of additional capital to support its operations and pay up rising debts across the East African region.
This comes barely two years after the retailer acquired Shoprite shops in Tanzania in a deal that was valued at TSh76 billion.
According to the Citizen newspaper, the company has written to Tanzania’s Fair Competition Commission (FCC) about the deal and the competition agency has given the interested parties a two-week ultimatum to air their views before approving the deal.
“FCC is currently investigating the acquisition in line with the provisions of the Fair Competition Act 8 of 2003 and the Fair Competition Commission Procedure Rules, 2013,” FCC was quoted by the newspaper.
“Pursuant to Rule 49 of the FCC Procedure Rules, 2013, parties (both legal or natural) who deem themselves as having sufficient interest in the merger or if the merger is not objected to, it will have or is likely to have material effect on their interests, are hereby notified to register their interest (if any) or file any information that will assist the FCC in reaching a just and reasonable decision,” the statement reads.
The Kenyan retail chain is currently facing an increase in debt both in Kenya and in Uganda, a situation that has led to its stalls running empty at its Ugandan outlets after suppliers stopped delivering products until previous payments are made.
Last week on Thursday, Nakumatt issued a statement admitted that it was in the red and was seeking a rescue. Nakumatt’s gross debt more than tripled to Ksh15 billion as at in February 2015 from Sh4.2 billion in 2011.
“Like any other business operating in this market, Nakumatt Holdings has faced a number of unforeseen business challenges. These challenges range from a depressed economy, higher operating costs and extraneous factors including risk management due to prevailing security threats, among others.” reads a statement from the MD Mr Atul Shah.
In Kenya, Nakumatt is currently looking for a strategic investor to take up a 25 per cent stake as reported by the Business Daily.