South African retailer Pick n Pay (PIKJ.J) announced on Monday that the base size of its upcoming IPO for its discount grocery chain, Boxer, will be near the top of its anticipated range.
Pick n Pay targets top-end IPO for Boxer
Pick n Pay had previously estimated IPO proceeds between 6 billion and 8 billion rand ($339 million to $452 million).
The Boxer IPO will include an overallotment option, capped at 500 million rand, to be fulfilled by issuing new shares. This option allows the underwriters to release additional shares if demand exceeds initial expectations, helping to stabilize the stock price.
This IPO is a central element of Pick n Pay’s two-part recapitalization strategy aimed at generating much-needed funds to reduce debt and address losses within its core Pick n Pay supermarket operations. The listing also seeks to attribute Boxer a market valuation that reflects its "superior" growth and return on invested capital.
Group CFO Lerena Olivier noted that Boxer has secured committed term debt and working capital facilities from funding partners for post-IPO operations, with an anticipated term debt facility of up to 850 million rand and a working capital facility of approximately 2 billion rand.
Dividend expectations
Pick n Pay will retain a controlling interest in Boxer and plans to distribute dividends equating to 40% of Boxer Group's headline earnings.
Boxer, South Africa's fastest-growing discount grocery chain with 489 stores, holds roughly 68% of the discount grocery market. To fuel further growth, Boxer is focused on expanding its store presence into new regions, enhancing value-added services, and strengthening its supply chain by establishing new distribution centers to support additional store rollouts.
