MPs seek a special audit of the proposed Quickmart share transaction.
A National Assembly committee questions CMA approval of the transaction, while the regulator says it involves an existing shareholder’s exit.
MPs have demanded a special audit of the proposed Quickmart share sale, questioning whether it could expose Kenyan investors to losses. The legislators challenged the Capital Markets Authority (CMA) over its approval and the safeguards for prospective investors.
The National Assembly’s Public Investments Committee on Commercial and Energy Affairs examined the transaction under chairman David Pkosing. The Pokot South MP questioned whether shareholders could withdraw their money and leave the supermarket financially weakened.
However, CMA Managing Director Wycliffe Shamiah defended the approval, saying the transaction concerned an existing shareholder’s exit. He also maintained that Quickmart did not carry the heavy debt associated with previous supermarket failures.
Quickmart share sale faces scrutiny
The proposed audit would examine the ownership and financial arrangements behind the transaction, including shareholder Atania’s planned exit. MPs also want scrutiny of the CMA’s approval process and its assessment of the retailer’s finances.
Kaloleni MP Paul Katana challenged the regulator to explain its measures to prevent further investor losses. He cited the failures of Nakumatt, Uchumi and Tuskys as warnings about the consequences of weak oversight.
In response, Shamiah said Nakumatt and Tuskys had operated outside the capital markets regulatory framework. Neither had offered shares to the public, he said, and their business models differed from Quickmart’s.
Shamiah described Quickmart as a small and medium-sized enterprise, distinguishing its financial structure from those of collapsed retailers. He said Atania sought to leave the business, rather than rescue a supermarket burdened by debt.
However, Soy MP David Kiplagat said assurances alone would not satisfy the committee. He asked the authority to demonstrate that it had properly assessed the transaction’s risks.
Investor protection remains central concern
The discussion also covered whether investors could secure financial protection if the investment failed. Pkosing asked whether the CMA could arrange insurance for Kenyans buying into the business.
Shamiah said such protection was unavailable because capital market investments inherently involve risk. However, Nairobi Woman Representative Esther Passaris questioned why investors should bear losses from potentially questionable investment decisions. She also sought an explanation for the shareholder’s decision to exit.
Shamiah acknowledged the committee’s concerns and undertook to obtain further information. He also accepted the need to examine lessons from earlier business failures to strengthen investor protection.
Pkosing remained unconvinced, questioning why the authority had approved the deal before addressing the committee’s concerns. He warned that another supermarket collapse could damage confidence beyond the company’s shareholders.
The chairman also asked the CMA to demonstrate its legal powers to oversee transactions outside the conventional stock market framework.
