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Egypt: discount chain Kazyon attracts $165m equity investment

Kazyon, the Egyptian discount retailer, has received a $165m equity investment from private equity company DPI. Co-investors include British International Investment (BII) and South Suez. DPI is an Africa specialist investor whose portfolio includes Nigerian QSR operator Food Concepts and Tunisian FMCG manufacturer SICAM. Kazyon is its only investment in a grocery retailer.

The investment has actually been made in parent company Kazyon UK Ltd. DPI partner Ziad Abaza and Kazyon founder Hassan Heikal have both been board member directors of Kazyon UK since May 2022, i.e. almost a full year ago.


Kazyon is the largest Egyptian discount supermarket chain founded in 2014 and has more than 600 stores across 18 governates in Egypt, employing more than 4,000 employees.

A small format discounter, it competes directly against Turkish discounter BIM, which has 311 stores in Egypt. While BIM’s growth in Egypt has stalled – we believe because the company is focusing on improving profitability at the expense of growth. It has opened stores over the past year, up from a reported 300 stores in Q1 2022 to 311 in Q4 2022. However, in Q1 2020 it had 320 stores.

By contrast, Kazyon consistently reported 450 stores across 17 governates in 2021/2022. As such, its enlarged store network of 600 stores represents substantial growth that outstrips the other high growth supermarket chain in Egypt, Carrefour (Majid al Futtaim). Bear in mind it opened its 200th store on July 5th 2017. Kazyon, whose corporate website stopped working in 2022, does not produce any publicly available information on its store network or network growth.

The language around the investment is interesting. Kazyon is a modern supermarket chain, albeit a discounter. In 2022, the modern trade accounted for just 17% of grocery retail sales in Egypt and was strongly focused on the urban middle class. But Kazyon now talks of providing “access to affordable products to the underserved market in Egypt,” representing a shift in positioning, certainly against its competitors. We think its mission to target the underserved must be placed in the specific context of bringing modern retail to underserved middle income neighbourhoods in major towns and cities. It isn’t targeting the lowest income consumers or rural consumers right now. We note, however, that DPI has an investment in MNT-Halan, a new, disruptive lender to unbanked Egyptian consumers and therefore an area where it already has data and expertise.

The news release accompanying the investment also talks of new markets (here meaning additional countries). It is customary for expansionist retailers to talk about new country markets but rarely materializes quickly. Perhaps the interest is DPI’s existing investment portfolio and experience: Morocco, Tunisia and Algeria as well as Nigerian and Botswana. Of those markets, the most obvious options are Morocco, where BIM also operates, and Tunisia, where there is no major small format discounter.

$165m pays for a lot of expansion but we still expect the focus to be on Egypt, where Kazyon is already embedded and where restrictions on imported FMCG products to protect fx hand an advantage to a local retailer selling a limited range of SKUs, primarily sourced domestically and to a population undergoing a severe cost of living crisis.


Source: Trendtype








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