Weak companies struggle to attract bailout capital injection

A closed Uchumi Supermarkets outlet in Mombasa. FILE PHOTO | NMG Scores of loss-making private and Nairobi Securities Exchange-listed firms are yet to raise new capital from strategic investors to turn around their fortunes, leaving their future uncertain.

They include Mumias Sugar Company, Consolidated Bank, Spire Bank, Jamii Bora Bank, Uchumi Supermarkets, Nakumatt Holdings, Real People, Deacons East Africa and East African Portland Cement Company (EAPCC).

Some of the companies have gone for years without securing new investors, making their precarious positions even worse.

The delay in getting new suitors indicates that the businesses are not attractive to prospective investors. It could also mean that negotiations with the approached investors have collapsed have collapsed.

The companies’ search for new investors came after existing shareholders opted not to provide additional capital, having endured major capital losses on the way down.

Uchumi, for instance, failed to get investors whom it planned to allocate a majority stake in exchange for Sh5 billion capital injection. The retailer is currently locked in negotiations with creditors, having virtually ceased trading. Microlender Real People, which has defaulted on its corporate bonds, is also yet to get an investor.

In banking, Consolidated Bank and Spire Bank are among the institutions still waiting to raise new capital from strategic investors. Consolidated Bank had created 175 million preference shares valued at Sh3.5 billion to be given to a strategic investor but there has been no successful taker.

The future of Jamii Bora, which last published results in the first quarter of 2018, was thrown into uncertainty with its suitor CBA Group prioritizing a merger with NIC Group to create the new NCBA Group.

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