Kaufland Australia receives another $145m capital injection

Sue Mitchell
Feb 26, 2019
AFR
The world’s fourth-largest retailer Schwartz Group has injected another $145 million of capital into Kaufland Australia, underlining the discounter’s ambitious plans to take on Woolworths, Coles, Aldi, IGA and Costco.
According to documents lodged with the Australian Securities and Investments Commission this week, Kaufland issued another $145 million of shares to its German parent, taking paid up capital to $323 million.
This followed a $60 million capital injection in October, which boosted paid up capital to $178 million.
German discounter Kaufland has injected another $145 million into its Australian business, underlining its ambitious growth plans.
“This capital increase reflects the importance and long-term commitment to our expansion,” a Kaufland spokeswoman said on Tuesday. “It marks our continual investment in Australia both now and for the future, through the creation of jobs, competition and opportunity.”
After confirming in 2017 it had an “ambitious Australian investment and development program”, Kaufland has moved quickly to lay the foundations for what analysts believe could become Australia’s fourth largest food and grocery chain.
Kaufland, the sister chain of German discounter Lidl, is believed to have secured almost a dozen store sites in Victoria, South Australia, NSW and Queensland and has established a new head office in Melbourne, ​on the site of a former Bunnings store, to complement state offices in Brisbane, Sydney and Adelaide.
The first hypermarkets, which will carry a wide range of fresh food and packaged groceries as well as clothing and footwear, electronics, homewares, sports goods, stationery, garden products and hardware, are now expected to open in 2020, rather than 2019.
Market penetration
According to Morgan Stanley reports last year, Kaufland was expected to open between seven and 10 stores in the first year and eight stores a year over the next five years – moving into sites vacated by Bunnings, Masters, Target and Big W – taking its footprint to 48 and lifting sales to $2.8 billion by 2025.
Based on its market penetration in Europe, where Kaufland has more than 1266 stores, Morgan Stanley believes there is scope for between 133 and 295 Kaufland stores in Australia.
Kaufland sells fresh food and packaged groceries as well as clothing and footwear, electronics, homewares, sporting goods, stationery, garden products and hardware. supplied
Kaufland has snared at least one site vacated by Masters, and the Bunnings Warehouse Trust is believed to have sold several properties to the company.
However, property centre owners and investors including Vicinity Centres, Pacific Group of Companies, GPT Group, QIC and ISPT are opposing Kaufland’s attempts to fast-track development of six stores in Melbourne by bypassing local governments and going directly to the Minister of Planning.
The Master Grocers Association, which represents independent retailers such as IGA and Foodworks, is also opposed to Kaufland’s accelerated development plans, saying the company was overriding local decision-making processes by seeking state government intervention to mass rezone land in Melbourne.
The MGA has launched a Save Our Shops campaign, saying the foreign-owned company plans to “drop massive mega malls on communities without giving them a say”.