Pick n Pay Boxer listing details
Pick n Pay shareholders will not get any shares in Boxer as part of its initial public offering (IPO), and they may see the share price slide after the listing.
Pick n Pay recently announced that the Boxer IPO is well advanced and will further strengthen the balance sheet.
The net proceeds from the Boxer listing will be used for targeted investment in the turnaround of the Pick n Pay supermarket business and debt repayment.
Pick n Pay plans to raise between R6.0 billion and R8.0 billion through the IPO and expects the base size to be towards the upper end of this range.
The retailer said it would retain a controlling interest in Boxer. However, it did not provide further details about the listing.
One of the questions many Pick n Pay shareholders were asking was whether they would receive Boxer shares as part of the IPO. The answer is no.
Pick n Pay explained that the Boxer IPO will take place through a private placement of Boxer shares to certain qualified investors.
“Pick n Pay shareholders who are qualifying investors will certainly be able to apply for shares along with other qualified investors should they wish to,” the retailer said.
The company said it could not provide further about the Boxer IPO due to regulations governing new listings.
“Further information on the Boxer IPO will be made available in the pre-listing statement, when available,” Pick n Pay said.
Daily Investor asked one of South Africa’s top retail equity analysts to gain further insight into what the Boxer IPO will mean for Pick n Pay shareholders.
The analyst asked to remain anonymous as the listing conditions have not been confirmed, and much of the data is based on estimates.
He explained that while Pick n Pay shareholders will not receive Boxer shares, Pick n Pay will remain the majority shareholder in Boxer.
He estimated that Pick n Pay will retain around 75% of Boxer’s stock, which means its shareholders will share in the upside of Boxer’s profitability and aggressive sales growth.
It raises the question of what Pick n Pay shareholders could expect to happen to the share price after the Boxer IPO.
The analyst said predicting the share price movement was difficult, but he provided a guestimate about what may happen.
He valued Boxer at around R28 billion, slightly higher than Pick n Pay’s current market capitalisation.
“Based on that assumption, and the assumption that Pick n Pay’s will retain a 75% equity stake, I expect the share price to drop by about 20% to 25%,” he said.
However, this may change depending on the structure of the listing, which will only be revealed in the pre-listing statement.
The Pick n Pay share price had a strong year. It is up 28.81% in 2024 year-to-date, which means even with a significant drop, it will still be in positive territory.