Singapore’s GIC increases stake in African retail group Shoprite

Singaporean sovereign wealth fund GIC Private Limited, manager of the country’s foreign reserves, has increased its shareholding in South African retail group Shoprite Holdings to 5%, according to a disclosure dated 3 November, circulated by the Johannesburg Stock Exchange news service. GIC held a 3.85% stake on 1 July 2022.

Shoprite is South Africa’s biggest grocery retailer in terms of sales and profit, with over 2,400 outlets under brands such as Shoprite, Usave and Checkers. While the group continues to pursue brick-and-mortar store growth and refurbishment, it is increasingly embracing technology through its digital innovation hub, ShopriteX. Its one-hour delivery app Checkers Sixty60 accounts for 75% of grocery deliveries in South Africa and the Xtra Savings rewards programme provides the group with rich customer transactional data. Shoprite has also introduced financial services products such as its Money Market Account, which enables customers to perform banking transactions from their phones or at any till point.

Under former chief executive Whitey Basson, Shoprite aggressively expanded its footprint to other African countries, where informal trade accounts for most retail sales. However, logistical challenges, high rentals and the depreciation of local currencies provided strong headwinds north of South Africa’s border. A shortage of foreign currency in Nigeria made it difficult to repatriate profits and pay for imports, while in markets such as Kenya, it had to compete with deeply entrenched local chains. 

Current CEO Pieter Engelbrecht, who took the reins in 2017, sharpened Shoprite’s focus on the South African market with a more measured approach to growth in the rest of the continent. In 2021, Shoprite sold its 25 stores in Nigeria and discontinued operations in Uganda, Kenya and Madagascar. The group still trades in 10 countries outside South Africa – including Mozambique, Angola, Zambia and Ghana – and aims to pursue an organic growth strategy in select markets. In a recent letter to shareholders, Engelbrecht said the region “is not a unified dollar-based economy that yields premium margins, but a diverse continent with unique opportunities and challenges”.

GIC invests across listed equities, bonds, real estate and private equity in over 40 countries and had 5% of its portfolio allocated to the ‘Middle East, Africa and rest of Europe’ region as of March 2022. Although it doesn’t break down individual investments, news reports show it has previously held interests in listed South African companies such as African Rainbow Capital Investments, Transactional Capital and Bidvest. In 2016, it allocated more than US$100m to two African real estate funds, managed by Actis and RMB Westport, respectively. 

 

References

 ‘GIC makes Africa play backing two biggest firms – exclusive’, PERE, 02 March 2016

‘Shoprite to quit Kenya in January after Sh3bn loss’, Business Daily, 31 December 2020

‘Shoprite sells Nigerian business after struggling with disruptions, repatriation of money’, News24, 02 June 2021

‘2021/22 report on the management of the Government’s portfolio’, GIC, July 2022

‘Meet South Africa’s lowest cost bank account’, Shoprite Holdings, 30 August 2022

‘Integrated report 2022’, Shoprite Holdings, September 2022

‘Disclosure of acquisition of securities by GIC Private Limited’, Shoprite Holdings Limited, 03 November 2022

‘Chicken Licken eyes everyone's souls and Shoprite has fans in Singapore’, News24, 04 November 2022