South African retailer Pick n Pay has confirmed the listing of its Boxer subsidiary by the year’s end, following an initial announcement in February of its plans. At the time, the company said it intended to raise between ZAR 6bn and ZAR 8bn through the offer but now expects the size to be towards the upper end.
Boxer Retail will have a primary listing on the Main Board of the JSE and a secondary listing on the A2X.
Pick n Pay has said it will retain a controlling interest in the company.
Pick n Pay has identified several strengths, which warrant a separate listing. This includes a differentiated growth and returns profile, untapped opportunities in South Africa’s grocery retail space and uninterrupted turnover growth over the past 22 years.
Boxer has a 4.2% market share of the formal grocery market but its share of the discount grocery market segment is 68%, meaning that in South Africa—the company also has a presence in Eswatini—it is two times larger than the second-largest retailer Usave. It has earned this position by exploiting its “soft discounter” position. This means its offering is narrower than traditional supermarkets but larger than hard discounters. It keeps prices low and encourages sales with combo deals and promotions.
Pick n Pay’s global strategy partner, Futureworld, estimates a USD 6bn (ZAR 106bn) formal retail grocery spend opportunity in locations without a Boxer presence. Its geographical core areas are KwaZulu-Natal and the Eastern Cape and the company has expanded its presence to all nine South African provinces. And it believes it can gain market share through plans to extend its store estate in new regions (for example Gauteng) and offer customers a compelling value proposition. The company consistently opens new stores and has averaged one new store per week over the past three financial years, leveraging pricing and combination deals to increase foot traffic relative to peers.
And finally, the company has experienced uninterrupted turnover growth for the past 22 years, growing its turnover at a CAGR of 18,6% for the three years ending 2024.
Advisers
Rand Merchant Bank, Morgan Stanley & Co. International, Absa Bank and The Standard Bank of South Africa (the managers) are advising the Boxer Group and Pick n Pay on the listing. Bowman Gilfillan Inc and Milbank LLP are legal advisers to the Boxer Group, while Webber Wentzel and Linklaters LLP are legal advisers to the managers.