This story has significance for readers across Kenya and beyond.
Africa-focused private equity firm Adenia is exploring the sale of its stake in Kenya’s top supermarket chain Quickmart in what could lead to a multi-billion shilling deal.
The equity investor, which holds a majority stake in Quickmart, has reached out to advisers and the Nairobi Securities Exchange (NSE), according to people with knowledge of the matter, who asked not to be identified as the information is still private.
The firm has widened its stake sale options to include a listing on the Nairobi bourse, marking a rare move for a PE fund that typically sells shares to high-net-worth investors or its peers.
“Quickmart will be coming to the market as we see a major private equity fund exit,” said a top CEO in Kenya’s capital markets, adding the fund has held discussions with the NSE.
There is no guarantee that a deal will be finalised given it remains at a preliminary stage.
The deal aligns with PE funds’ strategy of staying in a business for five to seven years, with an average holding period of about 6.5 years.
This timeframe allows the firm to restructure, build value, and prepare the company for a profitable exit.
Adenia invested in Kenya’s retail sector in 2018, taking over two family-run concerns.
In 2018 it bought Tumaini. The following year, after adding five new stores, it acquired the Quickmart business, bringing the total to 24 outlets.
Adenia sought to bet on a sector that had witnessed turmoil after several Kenyan supermarkets, including Uchumi, Nakumatt and Tuskys, had either gone bust or were about to do so as foreign retailers such as Shoprite and Game exited.
Quickmart launched a breakneck expansion that at first saw it open a branch nearly every month to become the fastest-growing supermarket chain in Kenya.
Financial Times ranked it this year at number 97 among Africa’s fastest-growing companies in a top 100 list that had 17 companies from Kenya.
The survey revealed that Quickmart posted sales of Sh46.9 billion in 2024 from Sh29.3 billion in 2021. It has 70 branches in 16 counties.
In a response to the Business Daily, Adenia did not confirm or deny the stake sale talk while expressing support for Quickmart's ongoing growth.
“As a matter of policy, we do not comment on market speculation. As with all our portfolio investments, we periodically review our options as part of our governance, and we'll be glad to share more once there is such an update,” said Adenia in an e-mail response.
“We'd ask that you hold off running anything this week. In exchange, we're happy to give you first look and a fuller comment as soon as there's a confirmed decision to share.”
While taking over Tumaini and Quickmart, Adenia judged Kenya a nascent retail market with potential to grow in both scale and sophistication.
Adenia’s initial growth strategy was two-fold. First, it replaced the Kinuthia founding family with professional management, brought in Peter Kangi’iri, with a background in retail, logistics and finance, as chief executive, and Jacques Dôme, who had been in retail in Dubai for 15 years, as his deputy.
Members of the Kinuthia family retained two seats on the seven-member board.
Second, it sought to strike better deals with Kenyan suppliers, many of which enjoy dominant market positions.
Quickmart, now the second-largest retailer after Naivas and ahead of Carrefour and Chandarana Food Plus, has acquired the scale that has provided it with the bargaining muscle.
It has ambitions to spread into other East African countries, starting with Uganda, before venturing further into the Democratic Republic of Congo (DRC) -- a market it sees ripe for retail modernisation in the same manner as Kenya.
Its growth and ownership mirror that of rival Naivas.
In 2022, France's Amethis investment fund sold its stake in Naivas to Mauritius-based IBL Group.
Amethis bought a stake in Naivas for an undisclosed amount in 2020, which has remained under the control of the Mukuha family since 1990
Naivas became a top retailer after the collapse of Nakumatt, which had dominated the sector. Nakumatt's failure has also created an opening for other chains like Quickmart and Carrefour.
Quickmart is presently the second-largest retailer after Naivas, which has over 100 branches.
Adenia has previously highlighted its positive impact since acquiring the retailer, including job creation and increased corporate governance.
“Adenia works closely with the Quickmart management team and supports the company on an operational level, as well as on corporate governance issues, know-how transfer and ESG,” the PE fund says.
“Around 2,800 new jobs have been created since the acquisition, and a gender action plan was implemented.” Quickmart closed 2024 with 7,313 employees from 4,479 in 2021.
Adenia said earlier it invested about Sh3.2 billion ($25 million) to fund Quickmart’s expansion.
The exit of the private equity firm via the NSE would mark a rare deal as PEs have traditionally steered clear of public markets as a departure route.
Liquidity concerns and a burdensome listing process have previously been listed as reasons for few to non-existent PE exits via public markets.
The 2024 Deloitte Africa Private Equity Confidence Survey showed that 56 percent of PE firms preferred secondary sales to their peers, while 32 percent favoured selling to strategic investors or partial exits.
The NSE is yet to record a listing from a PE firm/fund in the recent past, but its struggles to register new initial public offerings (IPOs) have eased with the listing of the Kenya Pipeline Company (KPC), Family Bank and Shri Kishana Overseas Limited over the past 12 months.
“Private equity firms now hold portfolio companies for an average of 6.5 years, with many extending well beyond the traditional four- to five-year window. The days of quick flips are largely over. Value creation progress, not calendar dates, drives when sponsors decide to exit their investments,” Ascent CFO Solutions states in a note.
“Fund strategy, debt structure, growth momentum, and market conditions all influence whether an exit happens in year three or extends to eight years or more.”
Reporting originally appeared via Business Daily. Read the full source for additional context.