The orange and green stores are opening at record speed, whether 200 metres away from Chandarana, across from Carrefour or in place of former Nakumatt shops.
On Valentine’s Day, hundreds of people flooded the sidewalks in front of a city centre Naivas store to buy chocolates and flowers at low prices.
Why is the three-decade-old family company attracting crowds and investors?
“It’s a Kenyan success story and we really liked that aspect,” said Frank Ndiyo, Investment Director at Amethis.
The French investment fund manager dedicated to the African continent recently completed the acquisition of a minority stake in Naivas, Kenya’s leading supermarket chain in terms of market share.
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Wambui Mbarire, Chief Executive Officer of the Retail Trade Association of Kenya, said: “The new owner only has a 30% shareholding, so the fund will be limited to improving operational efficiency to make the business more profitable.”
Kenya’s star pupil of retailers
After a negotiation process that lasted more than a year, the agreement was signed in late 2019 in Nairobi, a city home to Amethis’ newest office. According to Ndiyo, “We’re going to help the company think outside the box and refresh their management strategy a bit” by providing management advice, improving the board of directors and committees, supporting hiring, etc.
To accomplish these goals, Amethis is working in cooperation with German finance institution DEG, IFC (the private arm of the World Bank Group) and the MCB Equity Fund, an investment fund owned by Mauritius’s MCB Bank.
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“In recent years, Naivas adopted a strategy that works. Their board of directors is stronger and they’re being assisted by an advisor,”Mbarire said.
The supermarket retail expert added that Naivas’ network of 62 stores generates annual revenue of between 50 and 60bn Kenyan shillings (€436 to €523m).
Naivas is in a class of its own in the competitive and fluctuating Kenyan retail market, but also serves as a reminder of Nakumatt’s unfortunate downfall.
- Like Naivas, Nakumatt was a family-owned company with a 30-year history and a footprint of 60 stores in Kenya and, later, Uganda, but it fell apart in a matter of a few years under the crushing weight of debt.
With a host of other chains such as Tuskys, Chandarana, Quickmart, Carrefour, Shoprite, etc., looking for success the competitive environment does not get any easier in a country where “70% of day-to-day purchases occur in the informal market,” the investment fund noted.
However, Amethis has high hopes: “Nakumatt’s collapse has benefited the entire sector and we believe that Naivas is a local brand capable of future growth despite these kinds of market fluctuations.”
“A Kenyan success story”
“They’ve been very good at what they do for 30 years. We’re just giving them a boost,” Mr Ndiyo said. Founded in 1990 Nakuru, which today is Kenya’s fourth most populous city, the family chain initially grew out of suburbs like Rongai and eventually spread to Nairobi in 2001.
“Nairobi, Mombasa, Kisumu, Nyeri, Meru, Thika, Nakuru, Eldoret, Kakamega. They’re everywhere, actually,” Mbarire said. Ndiyo confirmed: “They’re in every region.”
Amethis believes the retailer’s regional footprint, which distinguishes Naivas from other chains such as Carrefour, whose locations are concentrated in Nairobi. “Our investment approach is particularly focused on this sector because it comes in very close contact with every segment of the population.”
- The investment is the fourth for the pan-African Amethis Fund II, which raised €375m in June 2019.
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