Centum Investments has announced that it will purchase Aureos East Africa Fund’s entire 5.53% stake in Kenyan fashion retailer Deacons.
Centum is set to buy Aureos East Africa Fund’s 6.8m shares in Deacons, equivalent to a 5.53% stake. The value of the transaction has not been disclosed. Aureos East Africa is part of the Abraaj Group, which recently acquired Kenyan coffee shop chain Java. The firm is an affiliate of the Kenyan government-owned Industrial and Commercial Development Corporation and owns a stake in troubled supermarket chain Uchumi among its portfolio of Kenyan businesses.
Deacons is one of the leading retailers in Kenya. It has 33 stores in East Africa – including some stores in Uganda and Rwanda. It is the franchise holder for Reebok, Adidas and Mr Price among its store brand portfolio. It was previously South African department store retailer Woolworths’ partner in East Africa.
Deacons has had a difficult year. It reported a net loss of KSh278m ($2.67m) for the year to December. This compared to the previous year’s profit of KSh100.6m ($0.97m) and was as a result of falling sales. Over the same period its revenues dropped 7.4%, which it blamed on supply chain issues from South Africa and falling like for like sales in existing stores.
In February this year, Deacons opened four shops at new Two Rivers shopping mall. It has funded this by taking a loan of over KSh1.3bn ($12.5m) at a 21% interest rate, much higher than the maximum allowed for ordinary bank loans, which are capped at 14% by Kenyan authorities.
Centum’s move could well signal it trying to take a larger stake in Deacons. As Business Daily notes, The Nairobi Securities Exchange-listed firm has a policy of selling minority stakes in companies it cannot control via a majority stake.
