Budget SA retailer's stock price jumps 17% on debut

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The official listing of Boxer stores on the Johannesburg Stock Exchange (JSE) on Thursday marked South Africa’s biggest initial public offering (IPO) since 2017.

The company’s stock price jumped 17% on its first day, rising to 63.01 rand per share, up from its IPO price of 54 rand.

Why the Boxer IPO matters

Boxer, known for its affordable grocery stores, raised at least R8 billion through this IPO for its parent company, Pick n Pay Stores Ltd.

Due to strong investor interest, the total could increase to 8.5 billion rand if more shares are issued through a special option called a “green-shoe” allocation.

This successful launch signals renewed optimism in South Africa’s stock market, which has seen more companies leaving the exchange than joining in recent years.

Since June, the market’s main index has risen by 15% in dollar terms, driven by positive economic changes, including a new business-friendly government coalition.

A positive outlook for growth

Investors are excited about Boxer’s potential. Meryl Pick, a fund manager at Old Mutual Invest, noted that the company’s strong growth story stands out in a market where opportunities have been limited.

“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. As the company performance unfolds, it’ll find a more consistent level.”

Part of Pick n Pay’s turnaround plan

Boxer’s IPO is part of a larger strategy by Pick n Pay to turn the struggling supermarket chain around. Earlier this 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 focuses on serving budget-conscious shoppers and operates 500 stores across South Africa, half of which opened in the past seven years. It has an annual turnover of R40 billion.

Analysts believe the company has significant potential for further growth.

Jithen Pillay, a portfolio manager at Allan Gray, described Boxer as “one of the brightest spots in South African retail.”

Major financial institutions, including Rand Merchant Bank, Morgan Stanley, Absa Group, and Standard Bank, managed the IPO process. Their involvement highlights the importance of this listing in South Africa’s economic landscape.

Overall, Boxer’s successful debut is a positive sign for the country’s stock market and a strong indicator of confidence in South Africa’s retail sector.