Pick & Pay, one of South Africa’s major grocery chains and partially owned by the billionaire Ackerman family, plans to list its low-cost Boxer company on the Johannesburg Stock Exchange (JSE) before the end of the year.
The IPO might raise up to R8 billion ($451.2 million), making it the largest public offering in Africa in 2024.
The move is part of a larger restructure as Pick & Pay deals with a sluggish consumer market, load shedding, and increased competition. The retailer’s two-step recapitalization plan intends to bolster its balance sheet, with the Boxer IPO being a key component.
Pick & Pay’s cheap chain Boxer, bought 22 years ago, is critical to its expansion goals. The retailer said Monday that it anticipates Boxer’s IPO to raise between R6 billion ($338.2 million) and R8 billion ($451.2 million). The sale would include an overallotment option valued at R500 million ($28.2 million).
Boxer, positioned as a low-cost option, has gaining appeal as living prices rise. Pick n Pay intends to retain a controlling stake in Boxer even after the listing, bolstering its dominance in the low-cost retail market.
The Boxer IPO follows Pick n Pay’s R4 billion ($225.6 million) rights offering, which was 106% oversubscribed, with total subscriptions topping R8 billion ($451.2 million).
The increased demand demonstrates investor confidence in the company’s turnaround strategy under returning CEO Sean Summers.
Summers, who headed Pick n Pay from 1996 to 2007, returned in October 2023 to help it recover. His three-year strategy focuses on stabilizing operations, lowering costs, and listing Boxer to generate further financing.
Despite a 45 percent higher after-tax loss of R827.4 million ($47 million) in the first half of 2024, Summers remains hopeful, aiming for a 50 percent decrease in trading losses in the core Pick n Pay segment by year-end.
Pick n Pay’s share price, which dipped below R25 ($1.3) earlier this year, has recovered, with a 33% increase so far in 2023. The retailer’s market value has risen past $1 billion, indicating renewed investor confidence under CEO Sean Summers.
With nearly 2,000 outlets in eight African countries, Pick n Pay is South Africa’s second-largest grocer, trailing only Shoprite.
The Ackerman family, which owns 25.53 percent of the company (124.7 million shares), is expected to maintain control as Boxer prepares to list on the JSE, most likely in November.
“The worst is behind us,” Summers said in an interview. “There’s still a lot of work ahead, but the foundation is in place.” The Boxer listing is seen as a key step in the company’s recovery, with potential to unlock value and fuel future growth.
