Pick n Pay eyes R8.5 billion payday

Pick n Pay expects to raise R8.5 billion from the upcoming listing of Boxer on the JSE.

Earlier this month, Pick n Pay announced that it would list Boxer on the Main Board of the Johannesburg Stock Exchange (JSE) on 28 November 2024.

“The listing of South Africa’s fastest-growing grocery chain will allow investors to own a share of this successful retailer as it takes up its rightful place on the JSE, alongside the major retail players in South Africa,” said Pick n Pay.

The group has announced that the proposed offer for subscription by Boxer of newly issued Shares to selected investors ended on 22 November.

The Board of Directors of Boxer said that 157,407,408 Offer Shares, representing an aggregate amount of R8.5 billion at a subscription price of R54.00 per Offer Share, have been allocated to selected qualifying investors for subscription.

The Offer Shares are expected to settle on Thursday, 28 November 2024.

Based on 457,407,408 Shares in issue, assuming the Overallotment Option is exercised in full, the Offer Price suggests that Boxer has a market capitalisation of R24.7 billion.

The Offer Shares represent 34.4% of the Company’s total issued Shares. Pick n Pay will hold the balance of 300,000,000 Shares, or 65.6% of the total issued share capital of the Company.

“Local and international investors have demonstrated extraordinary support for the Company’s equity story and growth trajectory, with the order book being multiple times oversubscribed at the top end of the Offer Price Range,” said Boxer CEO Marek Masojada

“The Board of Directors of Boxer is confident that the initial shareholder register strikes a balance between local and international shareholders, long-term investors and liquidity providers, including through the participation of local stockbrokers,” said the group.

“The JSE listing will give Boxer a platform from which to pursue its strategy, as it will elevate the Boxer brand, enhance its access to capital to sustain growth, instil public transparency and market discipline and enhance its profile with key stakeholders”.

Boxer also plans to have a secondary listing on the A2X.

Cash injection

Boxer’s IPO is the second and final step of the two-step recapitalisation plan by Pick n Pay following a R4 billion rights offer conducted earlier this year.

The capital raise comes amid a challenging period for the group after it posted an R827.4 million loss for the interim period of 26 weeks ending 25 August 2024 – extending losses by 45% compared to the same period last year.

One of the few bright sparks for the group has been Boxer, which started from a rural or smaller-town operator to a major player in the grocery game.

According to Pick n Pay (which bought Boxer in 2002), Boxer has a market share of 68% of the discount grocery retail market and an estimated share of 4.2% of the formal grocery market.

It has 308 Superstores, 162 Liquor Stores and 30 Build Stores across South Africa, as of October 2024.

On average, Boxer has added a new store every week for the last 3 financial years and has experienced a 14% CAGR in store numbers over the same period.

It grew its turnover at the South African market-leading CAGR of 18.6% between FY2022 and FY2024, with like-for-like growth of 7.7%.

Its lean model, with fewer stock-keeping units (3,000 vs. 18,000 at Pick n Pay), keeps costs low, which allows it to negotiate favourable deals with suppliers.

By the end of the current financial year, it plans to add add 65 new stores.

In the medium to long term, it plans to double its store footprint by opening 60 to 70 stores a year for the next six to seven years.

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