Pick n Pay Stores Ltd. has announced plans to list its low-cost retail chain, Boxer, on the Johannesburg Stock Exchange by the end of this year. The move aims to raise up to 8 billion rand (approximately $452 million), positioning it as the largest initial public offering (IPO) on the continent in 2024.
As part of a broader restructuring effort at South Africa’s third-largest grocery retailer, Pick n Pay anticipates that the IPO will reach the upper range of its previously estimated target of between 6 billion and 8 billion rand. The offering will also include an overallotment option, which is expected to be capped at 500 million rand.
Following the announcement, Pick n Pay’s stock rose by as much as 5.4% in Johannesburg, reflecting a year-to-date increase of 38%, making it the top performer on the FTSE/JSE Personal Care, Drug and Grocery Stores Index. This surge is more than double the growth of the next-best stock in the index.
In the six months leading up to August 25, sales at Boxer increased by 12%, a performance that could help attract investors amid the company’s efforts to rejuvenate its brand.
CEO Sean Summers, who returned to the company last year, is implementing a three-year turnaround strategy that includes a 4 billion rand rights offer and the public listing of Boxer. Post-IPO, Pick n Pay intends to retain a controlling stake in Boxer, with the listing anticipated to occur in November.
Boxer, which Pick n Pay acquired 22 years ago with just 35 stores, has expanded significantly and now operates 500 outlets across South Africa, employing around 30,000 staff. Notably, half of these stores were opened in the past seven years.
Despite a 45% increase in its after-tax loss, which totaled 827.4 million rand in the first half of the fiscal year, Summers expressed optimism about the company’s future. He believes Pick n Pay can cut trading losses in its primary segment by as much as 50% for the entire year.
“The worst is definitely behind us,” Summers stated in a recent interview. “There is still a tremendous amount of work to be done, but the foundation has been established.”
