Boxer made waves with its R8.5 billion initial public offering (IPO) on the JSE yesterday, marking a significant milestone that also underscored Pick n Pay’s return to health.
Pick n Pay retains a controlling stake of over 60% in Boxer. The South African grocery retail market is valued at R1.1 trillion.
Boxer has approximately 68% of the discount grocery retail market and has earned its market-leading position by leading the “soft discounter” proposition in the South African market.
This is aimed at delivering low prices for customers while adding additional value in the form of a slightly wider product offering than a hard discounter model, which typically offers customers only one product option.
Boxer’s high sales density, low-cost operating model, and relatively light asset base allows it to generate high returns on investment, with a return on invested capital of 26.5% for the 52 weeks ended February 25, 2024.
Marek Masojada, Boxer CEO, said, “The listing on the JSE will increase our profile and visibility, and provide Boxer with access to a large pool of capital for growth. The support from investors was overwhelming, clearly demonstrating the worth of the Boxer business, and unlocking value for both Boxer and Pick n Pay shareholders.”
He told Business Report that there were positive signs in the South African economy that “we hope will lead to GDP growth”.
Lower interest rates, reduced fuel prices compared to last year, and the end of load shedding are all factors that put more money in people’s pockets, which should ideally lead to increased sales.
JSE CEO Leila Fourie hailed the IPO as “a momentous occasion” and “a turning point” for South Africa’s IPO pipeline.
Boxer’s listing brings the total number of companies listed on the JSE to 281 with a market cap exceeding R19 trillion.
The IPO, spearheaded by Pick n Pay CEO Sean Summers as part of a larger recapitalisation strategy, was priced at R54 per share—the top end of the guide range—and was multiple times oversubscribed.
This IPO marks the second step in Pick n Pay’s turnaround plan. The first was a R4bn rights offer in August 2024.
Boxer has experienced significant growth since its acquisition by Pick n Pay in 2002. Boxer has a footprint of 500 stores across South Africa and Eswatini, generating R37.4bn in annual turnover for the 2024 fiscal year. The company plans to further its expansion with the addition of 65 new stores by the end of 2025.
“For decades, the brand has successfully competed against some of South Africa’s largest retailers and now takes its rightful place alongside them on the JSE,” Boxer said.
Summers said, “We saw the potential in Boxer over 22 years ago when we first bought the company, and I have no doubt it will grow as a formidable contender in the retail sector. It’s come full circle.”
The positive sentiment on the local bourse bolstered the discount retailer’s shares. The first trade of the day was at R63.01 a share. By 4.30pm Boxer’s share was at R64.57, while Pick n Pay’s shares gained 0.43% to R30.13.
Richard Bray, the head of investor relations at Abax Investments, said investment sentiment was “extremely positive” on Boxer’s listing, which was demonstrated by the interest expressed in the placement of shares (the order book was multiple times oversubscribed) as well as the positive share price move.
Bray said the positive share price response “was largely expected given the robust interest in the IPO and compelling investment case”.
He said shares of Boxer gained +15% (at the time of writing) on its first day of trading.
“Boxer is a high-quality business, with many attractive elements – it is the leading soft-discount grocery retailer in South Africa, that generates strong cashflows, delivers high returns, has clear opportunities for growth and has an experienced and aligned management team with demonstrable track record,” Bray said.
Boxer will continue to compete effectively and has an attractive runway for growth over the long term, supported by space expansion and anticipated market share gains, Bray said.
BUSINESS REPORT