Market News
Naivas owner plans extra Sh9bn regional buyouts
Wednesday November 01 2023
IBL Limited, which owns an indirect stake of 37.32 percent in supermarket chain Naivas Limited, is set to invest an additional Sh9 billion. FILE PHOTO | NMG
IBL Limited, which owns an indirect stake of 37.32 percent in supermarket chain Naivas Limited, is set to invest an additional $60 million (Sh9 billion) in new buyouts in the East African region as it seeks to diversify from its home market of Mauritius.
Most of its recent investments have been in Kenya where it has spent more than Sh20 billion to buy the Naivas stake as well as majority ownership in solar firm Equator Energy and pharmaceutical distributor Harley’s, which also operates in multiple countries in the region.
Read: Naivas opens 100th store, eyes two more
“IBL Limited has invested $140 million in [the full year to June 2023] and has committed to a further $60 million in [the current financial year],” the multinational said of its regional investment plans in a trading update.
IBL says it has identified more than 60 deals since 2018 when it opened an office in Nairobi to lead its regional expansion strategy. It prioritised 12 transactions and nine of those were approved by its strategic committee.
It went on to close five deals including the purchase of the Naivas stake alongside other institutional investors. The multinational says there are currently three active deals, including transactions by subsidiaries.
Through regional investments, IBL plans to cut its reliance on the Mauritian market from the current 90 percent to about 40 percent. In Kenya, it has invested aggressively in less than two years to enter the country’s retail, insurance, energy and pharmaceutical sectors.
The wave of investments started with the acquisition of a 26.32 percent stake in Naivas in June 2022 at a cost of $100 million (Sh15 billion at current exchange rates).
It established Ellgeo Seagon Re in September 2022 at an undisclosed cost, entering the reinsurance market where the major players include Kenya Re.
It acquired a majority stake in Equator Energy in March this year and followed it up with the purchase of an additional 11 percent stake in Naivas in June for an undisclosed sum.
It then made a move to acquire Harley’s in a transaction that is expected to have closed in recent days.
IBL says its East African business now generates revenues of more than $900 million (Sh135 billion) per annum.
The choice of Kenya as a launch pad for the regional investments signals the country’s strategic position.
Multinationals have cited several factors for choosing Kenya as an investment destination, including its relatively large economy, skilled workforce and membership to the East African Community (EAC).
Read: Naivas founders eye Sh5.8bn as foreigners seize control
The trading bloc has a population of 283 million, providing a major market for businesses.
Kenya is also a regional communications and logistics hub, facilitating the movement of people and goods via road, air and sea.
