SOUTH AFRICA – Grocery retailer Pick n Pay has divested 34.4% of its stake in the discount chain Boxer for 8.5 billion rand (US$471 million) to institutional investors through an initial public offering.
Pick n Pay, the country’s third-largest grocery retailer by market cap, will retain a 65.6% stake in Boxer. Founded in 1977 as a small operator in towns like Nquthu and Ulundi in KwaZulu-Natal, Boxer has expanded to 489 stores across South Africa and Eswatini, commanding approximately 68% of the discount grocery retail market share.
The IPO marks the second and final step of CEO Sean Summers’ two-step recapitalisation plan to raise the necessary cash to reduce Pick n Pay Group debt and address its loss-making core supermarket business.
Earlier, the company raised R4 billion through a rights issue. “Local and international investors have shown extraordinary support for Boxer’s equity story and growth trajectory, with the order book being multiple times oversubscribed at the top end of the offer price range,” Boxer CEO Marek Masojada stated.
The retailer sold 157.4 million shares within a price range of R42-54. Proceeds from the Boxer IPO will be used by Pick n Pay to settle outstanding debt and reinvest in its core supermarket business.
Boxer has a 47-year history and a track record of consistent growth since Pick n Pay acquired it in 2002 under the leadership of then-CEO Sean Summers, at which time it had just 35 stores and annual sales of R800 million.
Its ‘soft discounter’ proposition in the South African market has secured it a significant share of the discount grocery market and an estimated 4.2% share of the formal grocery market—more than double that of its nearest competitor.
Between FY2022 and FY2024, Boxer grew its turnover at a market-leading CAGR of 18.6%, with like-for-like growth of 7.7%, driven by its customer value proposition and accelerated store rollout program.
One of Boxer’s strengths lies in its deep understanding of lower-to-middle-income communities in South Africa and Eswatini.
This clear market positioning has enabled strong like-for-like sales growth over many years, even in challenging circumstances.
Boxer’s 3,000 essential food and grocery products, including high-quality fresh meat, produce, and baked goods, focus on value and incorporate quality own labels, contributing 19% to sales.
Masojada, who was part of the team that negotiated Boxer’s sale to Pick n Pay 22 years ago, noted the business’s consistent growth, underpinned by a strong brand, an excellent customer offer, and a dedicated team.
“Our turnover growth has been achieved in the most competitive trading environments, reflecting the coming of age of the Boxer brand,” he explained.
“The brand’s success is recognition of how we’ve served our customers, the robust business model we have built, and our ability to compete successfully against other formats.”
Boxer has, on average, added a new store every week over the last three financial years, experiencing a 14% CAGR in store numbers during the same period.
By the end of FY25, it expects to add 65 new stores, with a medium-to-long-term goal of doubling its footprint by opening 60 to 70 stores annually over the next six to seven years.
At the beginning of the year, Pick n Pay announced its two-step recapitalisation plan to strengthen the Group’s balance sheet.
The first step was completed three months ago, with a successful R4 billion Rights Offer that was 106% oversubscribed, returning the Group to a positive equity position of R2.9 billion. The second step is now underway with the Boxer listing.
Proceeds from the IPO will be used to settle outstanding debt and reinvest in the core supermarket business. The future looks promising for Boxer as it is well-positioned to access both formal and informal grocery markets.
The company aims to double its revenue over the next five years, maintaining a steady pace in store rollouts, strong mid-single-digit like-for-like sales growth, and consistent profitability.
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