Pick n Pay to list Boxer unit in Africa’s biggest IPO this year

Sales at its low-cost Boxer business climbed 12% in the six months through 25 August.

28 Oct 2024, 08:12 by Moneyweb and Bloomberg · Moneyweb

Pick n Pay Stores said it will list its low-cost Boxer business on the Johannesburg bourse by the end of the year to raise as much as R8 billion ($452 million), which would make it the continent’s biggest offering this year.

Amid a revamp of South Africa’s third-largest grocer by revenue, Pick n Pay expects the offer to raise toward “the upper end” of a previously guided range of R6 billion to R8 billion, it said in a statement Monday. It will include an overallotment option that likely won’t exceed R500 million.

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Pick n Pay shares climbed as much as 5.4% in Johannesburg and have advanced 38% this year, making them the best performer on the six-member FTSE/JSE Personal Care, Drug and Grocery Stores Index. They’ve gained more than double the next-best stock on the gauge.

Sales at Boxer climbed 12% in the six months through August 25, which will help the struggling Pick n Pay woo investors.

Chief Executive Officer Sean Summers, who was rehired last year, has a three-year turnaround plan which included a R4 billion rights offer and selling shares in its Boxer unit. Pick n Pay will retain a controlling interest in Boxer after the listing that may be in November, he said.

Listen: Boxer remains Pick n Pay’s crown jewel

Boxer, which Pick n Pay bought 22 years ago with 35 stores, now has 500 outlets across South Africa with 30 000 employees. Half of those stores were added in the last seven years.

While Pick n Pay’s loss after tax widened 45% to R827.4 million in the first half from a year earlier, Summers is “quietly confident” that the Cape Town-based company will reduce trading losses in its core Pick n Pay segment by as much as 50% for the full year.

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Read: JPMorgan expects SA IPO surge on economic optimism

“The worst is definitely behind us,” Summers said in an interview. “There is still an extraordinary amount of work to be done, but the foundation has been set.”

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