Boxer Stores, South Africa’s well-known budget retailer, had a remarkable debut on the Johannesburg Stock Exchange (JSE) on Thursday. The company’s stock price surged by 17% on its first trading day, climbing from its initial public offering (IPO) price of 54 rand to 63.01 rand per share. This surge marks South Africa’s biggest IPO since 2017 and signals a renewed sense of optimism in the country’s stock market.
Through this IPO, Boxer raised a significant R8 billion for its parent company, Pick n Pay Stores Ltd. Investor enthusiasm was strong, and the total raised could increase to R8.5 billion if the company opts to issue more shares through a special option known as a “green-shoe” allocation.
A Symbol of Market Recovery
Boxer’s successful listing stands out in a period where South Africa’s stock market has seen more companies delisting than listing. However, recent economic improvements, including a more business-friendly government coalition, have contributed to the market’s recovery. The main index has risen by 15% in dollar terms since June, buoyed by investor optimism about the country’s economic prospects.
Meryl Pick, a fund manager at Old Mutual Invest, highlighted Boxer’s strong growth potential in a market that has seen limited opportunities. She emphasized that the scarcity of new listings makes Boxer an exciting investment. “Because there’s been such a shortage of new listings, there will be a lot of interest in it,” Pick said. “That interest could potentially push it to quite high levels, especially initially and then over time.”
Boxer’s Role in Pick n Pay’s Strategy
This IPO is part of a broader strategy by Pick n Pay to revitalize the struggling supermarket chain. Earlier in the year, Pick n Pay raised an additional R4 billion through a rights issue sale. Despite the IPO, Pick n Pay will retain a majority stake in Boxer, holding at least 65.6% of the company.
Boxer is focused on serving budget-conscious consumers and currently operates 500 stores across South Africa, with 250 of those having opened in the past seven years. With an annual turnover of R40 billion, the company has shown impressive growth, and analysts believe it has the potential to expand even further.
Jithen Pillay, a portfolio manager at Allan Gray, called Boxer “one of the brightest spots in South African retail,” underscoring the company’s significant growth prospects. Major financial institutions like Rand Merchant Bank, Morgan Stanley, Absa Group, and Standard Bank played key roles in managing the IPO, highlighting the importance of this listing for South Africa’s economic landscape.
Positive Signal for South Africa’s Stock Market
Boxer’s successful listing is not only a win for the company but also a promising sign for South Africa’s stock market. It demonstrates strong investor confidence in the retail sector, which could lead to further opportunities for growth and investment in the future.
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