Will Boxer listing on the JSE save Pick n Pay?

Retailer Boxer, the pride and joy of the Pick n Pay Group, was on Thursday listed on the Johannesburg Stock Exchange (JSE) with the hopes of saving the group from its financial woes.

Pick n Pay has unbundled Boxer so that it can be listed on the JSE.

Through Boxer’s initial public offering (IPO), Pick n Pay is aiming to raise R8.5 billion from the 157.4 million shares allocated to qualifying investors at a share price of R54.

Minutes after the listing, the share price was trading at R63, which the JSE believes will set the tone for other IPOs in 2025.

Boxer’s IPO

Patrycja Kula, JSE’s Primary Markets: Equity Origination Manager, told The Citizen Boxer’s IPO was multiple time oversubscribed, which means that the full capital raise they [Pick n Pay] wanted and the shares they had allocated were exponential.

“With this IPO there was a greater demand than there was a supply of shares.”

She added that it shows growing confidence in South Africa following a number of headwinds that negatively affected the markets.

Since the formation of the government of national unity, the JSE sees greater optimism – and Boxer’s listing attracted both local and offshore investors looking for growth in the country. 

ALSO READ: How did Pick n Pay do it? From technically insolvent to growing sales in months

Unbundling of Boxer

Boxer was launched as KwaZulu Cash & Carry in 1977, with the first store selling essential goods in the surrounding areas. In 1995 they expanded to the Eastern Cape under the name Boxer Cash & Carry.

It then became Boxer in 1997 and was acquired by Pick n Pay in 2002. The retailer said it actively seeks opportunities with established brands to further entrench accessibility to its consumers.

As of October 2024, Boxer operates 308 superstores, 162 liquor stores and 30 Build Stores across South Africa and Eswatini. The retailer said more will be opened before the end of the year.

To be able to place Boxer on the JSE, Pick n Pay unbundled it, which is the process of splitting companies. Now Pick n Pay holds 63% of Boxer.

ALSO READ: Pick n Pay brings old hand back to do his magic

What it means for shareholders and investors of Pick n Pay

Experts say the market cap of Pick n Pay after hearing the news of Boxer’s unbundling made it trade higher. But it also led to Boxer being valued higher than it initially was.

This has created value because now Boxer is looked at as a company with great trajectory, and solid financials.

Pick n Pay was technically insolvent, but it recorded some growth in its interim results for 26 weeks ended 25 August 2024, partly due to Boxer’s performance.

ALSO READ: Pick n Pay to convert 70 stores to Boxer, close 35 in revamp strategy

Pick n Pay financial woes

Pick n Pay’s audited results for the year ending 25 February 2024 showed that its liabilities exceed its assets for the first time, making it technically insolvent.

The retailer’s revenue increased from R109.28 billion to R115.37 billion, while trading expenses rose from R20.15 billion to R22.55 billion. Total liabilities exceeded total assets by R183 million.

However, CEO Sean Summers said the retailer has a strategy to turn the ship around.

“We are steadily progressing to a better performing and more profitable store estate by closing loss-making stores, converting stores to franchise, or to Boxer. Our estate is starting to make a great deal more sense,” he said.

Store closures

Pick n Pay closed 14 underperforming stores and completed the first successful conversion to Boxer.

“The Boxer IPO remains pivotal to our strategy, and their remarkable performance continues to prove it is an exceptional business. We are excited to see it thrive as a listed entity,” said Summers.

Summers said there has been a successful conclusion of the 106% over-subscribed rights offer as part of the group’s two-step recapitalisation plan, which raised R4 billion in new capital.

He believes Boxer’s IPO will further strengthen the group’s balance sheet. 

NOW READ: Pick n Pay’s franchise horror show