Boxer’s JSE debut: a promising start amidst investor optimism and strategic growth plans

28 Nov 2024

Boxer, the golden goose of ailing retail giant Pick n Pay, has officially listed on the JSE. The listing is expected to give a newfound gusto to Pick n Pay – and the bourse has reason to be cheerful, too.

Boxer shares saw their debut on the JSE yesterday morning. The 157.4-million shares, which were initially placed at R54, rose to R63.01 once trading began after an extended auction period. Opening-day share value peaked at a high R64.79 in the afternoon before falling back to close at a respectable R63.51.

The discount retailer operates 500 stores, sports an annual turnover of R37.4-billion, and boasts a trading profit of R2.1-billion.

Boxer’s entry into the JSE has been marked by high investor interest, as the initial R54 offer was oversubscribed multiple times during the IPO process, indicating a “bullish sentiment” among investors, according to the JSE.

Breath of fresh air for Pick n Pay

“The Boxer listing was driven by the capitalisation needs of Pick n Pay – but Boxer will seize the opportunities presented by being in the public domain. The strength of our balance sheet, our robust business model, and the look and feel of our store estate will open many doors for us,” said Boxer’s chief executive officer, Marek Masojada, who spoke at a keynote address at the JSE minutes before the market opened.

Boxer’s listing on the JSE follows its recent IPO, which raised R8.5-billion for its parent company. It may serve as a second wind for Pick n Pay, which has held on to more than 60% of Boxer stock.

The IPO has attracted sharp criticism from some quarters with consultant Paul Miller, for example, pointing out that when an offer is limited to banks, financial institutions and stockbrokers, it can hardly be said to be inclusive.

Read more: The Boxer case and how South Africa’s big banks damage the JSE

Boxer has consistently outpaced the growth of its parent company Pick n Pay over the past year, which has suffered from low profits and high interest payments.

Read more: Pick n Pay shakes up model, focuses on future to counter R3.2bn loss

“The capital raised enables Pick n Pay to repay all of its long-term debt and to convert interest costs to interest earnings, as the business will hold cash reserves critical for its turnaround – including for investment into new store refurbishments, product range development, technology and innovation and staff training,” Pick n Pay said in a recent shareholder announcement

The Boxer listing was the second step in Pick n Pay’s two-step recapitalisation plan, which it has been putting into effect over the past nine months. The first step was the Pick n Pay rights offer plan, which raised R4-billion for the retail group.

Read more: Pick n Pay rights offer receives massive shareholder support, hailed a ‘resounding success’

Optimistic JSE

The JSE has cause for celebration, not just because of the impressive amount of capital raised through the Boxer IPO, but also the investor optimism evident from Boxer’s high share price and oversubscription, the JSE’s primary markets equity origination manager, Patrycja Kula-Verster, told Daily Maverick.

Boxer is one of seven companies that entered the JSE in 2024, which is a welcome change from the trend of steady delistings from the JSE over the past decade.

Read more: WeBuyCars gets off to a strong start on the JSE

“The delistings have not been a unique scenario [as] other exchanges globally have also experienced a similar type of trend,” Kula-Verster said.

She said past struggles can partially be attributed to political and economic headwinds, such as rolling blackouts and a slow recovery from the Covid-19 pandemic.

“Post-GNU, we really see a positive sentiment playing out in the market,” she said.

The JSE has also attempted to staunch the bleeding by creating additional visibility and coverage for smaller listed companies, which seem to be the main candidates for desertion, and addressing regulatory concerns, Kula-Verster said.

“I think it’s fantastic that we’re closing off the year with such a strong performance of Boxer and the IPO. Again, the over demand signals an investor appetite for these types of companies to come to the market,” she said.

“The JSE has got a very healthy pipeline for next year, and we hope to see this trend continue.” DM

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Business Maverick

Breath of fresh air for Pick n Pay

Optimistic JSE