IBL Group, a multinational conglomerate led by Mauritian businessman Arnaud Lagesse, has partnered with French financier Proparco and German sovereign wealth fund DEG to acquire a significant stake in Kenya’s leading supermarket chain Naivas International in a deal worth Ksh3.7 billion ($31.5 million).
The acquisition comes more than two years after a consortium of investors led by the World Bank’s International Finance Corporation, MCB Equity Fund, and Amethis purchased the retailer’s shares for Ksh6 billion ($51 million).
The deal, which increases Proparco, IBL Group, and DEG’s stake in Naivas to 40 percent, has a higher per-share valuation than the Ksh6 billion ($51 million) paid by IFC, Amethis, and DEG to acquire a 30-percent stake in Naivas in April 2020.
Despite the negative impact of the COVID-19 pandemic on Naivas, the transaction underscores the company’s intrinsic value as Kenya’s largest supermarket chain and reflects the economic value and opportunities embedded in the domestic retail sector and mass consumer market.
Experts believe that the 40-percent shareholding in Naivas held by Proparco, IBL Group, and DEG was acquired for Ksh11.1 billion ($94.3 million), placing the company’s value at Ksh27.8 billion ($236.1 million), significantly higher than the implied value of Ksh20 billion ($170 million) in 2020 when the IFC-led consortium acquired a 30-percent stake in the Kenyan retailer.
The increase in Naivas’ market value can be attributed to its aggressive expansion across the country, which has been fueled by its recent investment in its grocery segment.
As the food and beverage segment has grown in Kenya, Naivas has converted some of its old outlets into food markets, a move that has not only encouraged customers to flock to its stores because of the variety of food products sold, but also provided a lifeline to farmers.
While commenting on the recent acquisition, Lagesse, CEO of IBL Group, said it is the highest-value investment that IBL has made since its inception more than 190 years ago.
“The investment in Naivas International, the retail chain’s owner, is the biggest investment in IBL’s history,” he said.
“This family business, founded in 1990, is an example of a success story that has grown despite the pandemic due to its strong business model, its 84 outlets in 20 cities and towns across Kenya, and its modern grocery retail within everyone’s reach,” Lagesse added.