The anchor shareholders of Quickmart, a Kenyan retailer, have been given the green light to sell up to 800 million shares, equivalent to 40 percent of their remaining stake, following the company's initial public offering (IPO). This development comes after the Capital Markets Authority (CMA) agreed to a lock-up rule that only covers part of their holding. The lock-up rule requires controlling shareholders to hold on to at least 60 percent of their shares for the next two years.
Quickmart's current owners, comprising Mauritius-registered private equity fund Adenia Partners, the founders of Quickmart and Tumaini supermarkets, and Chief Executive Officer Peter Kang'iri, are currently offloading two billion shares in the IPO, equivalent to a 50 percent stake, at a price of Sh7.50 a unit. Their shares are held through an investment vehicle known as Sokoni Retail Kenya Limited (SRKL). The partial lock-up means that they can sell an additional 800 million shares in the next two years should they wish to do so.
The CMA requires controlling shareholders to hold on to their stake for at least two years after listing, to reassure prospective investors that insiders are not looking for a quick exit or dumping struggling companies on the public. However, in Quickmart's case, the lock-up requirement is less restrictive, mirroring that imposed on the Family Bank founder Titus Muya and his associates when the lender listed by introduction in June.
The Quickmart sale, which opened this week and runs until October 30, is targeting Sh15 billion and values the company at Sh30 billion. Going into the listing, Adenia holds a 50.79 percent stake in SRKL, the family of Quickmart founder the late John Kinuthia 31.83 percent, the founders of Tumaini Supermarket 12.02 percent, and Mr Kang'iri 5.36 percent. Presuming the offer is fully subscribed, Adenia's stake will drop to 25.4 percent, with the stakes of the Quickmart and Tumaini founders falling to 15.9 percent and 6.01 percent respectively.
Although PE funds usually have an investment cycle of between seven and 10 years, Adenia has said that it remains committed to staying on board and supporting Quickmart's management through its next growth phase. The fund acquired its stake in the retailer between 2018 and 2019, after buying majority stakes in Quickmart (51 percent) and Tumaini (55 percent) and then merging the entities under the Quickmart brand in 2020.
The only exceptions to the 60 percent lock-up of their shares post-listing include transfers of shares to affiliates and related Adenia funds, disposals required by law, acceptances of a general offer, permitted encumbrances, and transactions approved by the placing agents, the CMA, or the Nairobi Securities Exchange (NSE). The International Finance Corporation (IFC) —the World Bank's private investment arm— has also been exempted from any lock-up restrictions after coming in as the offer's cornerstone investor.
The IFC will acquire 258.67 million shares in Quickmart, representing about 13 percent of the offer shares, and an ultimate stake of 6.5 percent in the company. The IFC's investment in Quickmart demonstrates its confidence in the retail sector, and it will be acquiring the shares on the same terms and conditions as all other investors in the offer.
Key points
- Quickmart's anchor shareholders can sell up to 800 million shares without restriction after the IPO.
- The lock-up rule requires controlling shareholders to hold on to at least 60 percent of their shares for the next two years.
- The IFC will acquire 258.67 million shares in Quickmart, representing about 13 percent of the offer shares.
