Boxer’s highly anticipated debut on the JSE on Thursday saw its shares soar as much at 20% at one stage, highlighting strong demand and investor confidence in the discount retail sector.
The low-cost retailer’s shares opened at R63.01, significantly higher than the initial public offering (IPO) price of R54, hitting a best level of R64.88 at one stage.
The IPO, which raised R8.5bn, was led by institutional investors. It marks the largest listing on the JSE this year and the first of its kind, with Boxer being the only discount retailer on the bourse.
The strong market response indicates a growing demand for the sector as consumers continue to prioritise value amid economic uncertainties.
Boxer CEO Marek Masojada attributed the company’s strong market debut to its proven value-driven model, which caters to cost-conscious consumers. He said the IPO armed Boxer with the resources to accelerate its growth, which included plans to double turnover within five years through new store openings and enhancements to existing outlets.
“Our success lies in staying true to our mission, and we’re excited to leverage this momentum for future growth,” he said.
The close of R63.51 a share gave Boxer a market cap of R29bn, dwarfing the likes of other recent listings WeBuyCars and Rainbow Chicken.
Boxer’s IPO is a crucial part of parent company Pick n Pay’s turnaround strategy. By unbundling Boxer, Pick n Pay raised much-needed capital to pay down debt and reinvest in its core operations.
Pick n Pay CEO Sean Summers hailed Boxer’s strong market debut as a win for both retailers. “Boxer has injected new life into Pick n Pay’s balance sheet, giving us the fuel to grow,” he said.
The listing comes as part of Pick n Pay’s two-step recapitalisation strategy to tackle its mounting debt and revitalise its core retail business. Summers described the milestone as a transformative moment enabling the group to shift from “survive” to “thrive” mode.
“Today, we woke up with zero debt and R4bn in cash on our balance sheet,” Summers said.
The capital raised enabled Pick n Pay to repay all its long-term debt and to convert interest costs to interest earnings, as the business would hold cash reserves critical for its turnaround, including for investment into new stores and store refurbishments, product range development, technology and innovation, and staff training, it said in a statement on Thursday.
The group’s recapitalisation plan, completed in just nine months, received strong shareholder support, Pick n Pay said.
The Pick n Pay rights offer, the first step of the plan, was more than double oversubscribed, and raised R4bn in August. The Boxer IPO, the second step, in which the Boxer shares were placed, attracted significant investor interest and was multiple times oversubscribed at the very top end of the price range, it said.
Strong shareholder support enabled Pick n Pay to retain more than 60% of Boxer, the group’s highly valuable growth asset.
“These results reflect shareholder confidence in the group’s strategy and future potential,” it said.
“Successfully concluding our recapitalisation plan in such a short space of time is an extraordinary milestone for Pick n Pay,” Summers said.
“The outcome reflects not only the individual strength of the Pick n Pay and Boxer brands but also the shared belief of our shareholders in our ability to deliver on our strategic goals,” he said.
Summers said the successful execution of the recapitalisation plan provided a solid foundation for the turnaround of Pick n Pay, which remained a multifaceted and multiyear strategy.
“Under the leadership of a refreshed management team, Pick n Pay has made early progress in enhancing its product range, improving its product availability and customer service and advancing its store reset programme, all of which have delivered encouraging early improvements in the underlying performance of the core Pick n Pay business, but with much more to do,” he said.
Update: November 28 2024
New information has been added to this story containing detail on the Boxer listing and its share price.
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