Walmart, which bought South Africa’s Massmart in a $2.4 billion deal in 2011, hopes to buy a controlling share in Kenya’s Naivas supermarket chain, according to Naivas chairman, Simon Mukuha, AfricanBusinessReview reports.
Naivas has 28 stores – fewer than its rivals, Nakumatt and Uchumi supermarkets, the report said.
Mukuha said Naivas, backed by Walmart, hopes to open two more supermarkets by the end of 2013. He said he recognizes that Africa’s economic growth is creating a growing middle class representing a new type of consumer.
“Massmart wants to come in with a partner, someone who can show them how to navigate this market. On our part, we are looking for an investor to pump in fresh ideas, fresh blood,” he said.
Massmart had no comment on the Naivas purchase, but its CEO Grant Pattison said in a recent email that the company had “met with several important players in that market, building relationships.”
Nic Norman-Smith, chief investment officer of Lentus Asset Management in Johannesburg, cautioned that Massmart may have to pay a premium to break into Kenya, given the limited number of available retailers that would fit its business model.
“There is a lot of demand for these assets, I would be very surprised if they didn’t overpay. If the price that Walmart paid for Massmart is anything to go by, they clearly have an appetite to grow at almost any cost,” he said.
In Johannesburg, Massmart Holdings said Tuesday its first-half earnings rose by as much as 57 percent, lifted by favorable exchange rates.