Uchumi set for rights issue

By Samuel Sanya and Claire Nakaayi

UCHUMI, a Kenyan listed supermarket chain has cross listed on the Uganda Securities Exchange with its shares closing at sh620 on day one.

Cross listing is when a company sells its shares on one or more share markets simultaneously, making it easy to raise capital.

Uchumi recently cross listed on the Rwanda Securities Exchange (RSE) and is set to cross list on the Dar es Salaam Stock Exchange. 

“This is another milestone for the USE. Cross listing makes it easy to get capital; this is the modern way of doing business, 

“This is a small step for Uchumi but a big step for regional integration,” Charles Mbire, the USE chairman, said at the Golf Course Hotel where the cross listing took place.

Geoffrey Onegi-Obel, the USE chief executive officer noted that additional capital will enable Uchumi open more branches in the country to create jobs and boost economic growth. 

Jonathan Ciano, the Uchumi boss says that the supermarket is set to issue 100 million shares through a rights issue to fund an ambitious expansion plan in the East African market.

“As our drive towards regional and continental growth gains momentum so has our desire to make Uchumi shares accessible to more stakeholders across the region,” Ciano said.

“Uganda’s middle class is growing very quickly, we want to open shop in every municipality where it makes commercial sense,” he explained.

The supermarket intends to raise Ksh1.5b (sh45b) according to media sources in the upcoming rights issue. Uchumi created 200 million new ordinary shares in December 2012 raising its share capital to Ksh3b (sh90b).

The firm has placed over 265 million ordinary shares on the Ugandan markets.

Uchumi becomes the 8th cross listed firm on the USE; there are 16 listed companies on the USE.

Aston Kajara, the state investment minister challenged listed Ugandan firms to cross list on the Nairobi Stock Exchange as this will entrench the regional customs union.

Japheth Katto, the Capital Markets Authority (CMA) boss noted that regional capital markets regulators have harmonised standards for listing bonds and are working to harmonize requirements for listing equity.

“There are very few differences in requirements for listing shares, and rights issues in all East African securities markets. In the future, firms should be able to trade in all markets after they have been approved in one country,” he said.

The East African Capital Markets are working to improve cross border payment systems as this will stimulate trade in cross listed stock.

In 2012, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) hinted on creating a more efficient bank payment system at a meeting in Kampala.

The system will automatically convert payments into local currencies to quicken across border payments.

When complete the system will reduce settlement time between Uganda and East Africa from five days to less than 30 minutes to boost trade.

The All Share Index dropped to sh1,598 from sh1,601 on Tuesday. Umeme dominated market activity selling shares worth sh149m at sh370 per share.