Boxer formally announces its intention to list on JSE

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As part of the IPO, the Pick n Pay Group aims to raise between R8bn and R8.5bn through an offer of up to 202.4 million Boxer shares (around 40% of its total issued share capital) at a share price of between R42 and R54 per share (implying a total market capitalisation of between R21.1bn and R24.7bn).

Pick n Pay expects to retain a majority stake in Boxer of approximately 60% to 65% post-IPO.

Boxer's IPO is the second and final step of the two-step recapitalisation plan by Pick n Pay. The listing of South Africa’s fastest-growing grocery chain will allow investors to own a share of this successful retailer as it takes up its rightful place on the JSE, alongside the major retail players in South Africa.

Boxer Superstores is the pre-eminent discount grocery retailer in South Africa with an annual turnover of R37.4bn and trading profit of R2.bn (FY2024) and a store estate of 489 (at August 2024).

Boxer has a 47-year history and track record of consistent growth since Pick n Pay’s acquisition of the business in 2002 under the leadership of then-CEO Sean Summers, when it had just 35 stores and annual sales of R800m.

Its ‘soft discounter’ proposition in the South African market has secured it a share of approximately 68% of the discount grocery retail market and an estimated market share of 4.2% of the formal grocery market, more than double that of its closest competitor, estimated at 1.8%.

Boxer grew its turnover at a South African market-leading CAGR of 18.6% between FY2022 and FY2024, with like-for-like growth of 7.7%, as a result of its compelling customer value proposition and accelerated store rollout programme.

One of Boxer’s strengths is its deep understanding of its customers across the lower-to-middle-income communities of South Africa and Eswatini. This deliberate and clear market positioning has enabled strong like-for-like sales growth over many years in very challenging circumstances.

Its 3,000 essential food and grocery products, including high-quality fresh meat, produce, and baked goods, are focused on value while incorporating quality confined labels, currently contributing 19% to sales.

Boxer CEO Marek Masojada, who was part of the team that negotiated the sale of Boxer to Pick n Pay 22 years ago, says the business has been growing consistently, underpinned by a strong brand, unbelievable customer offer and an execution-focused team.

“Our turnover growth has been achieved in the most competitive of trading environments, reflecting the coming of age of the Boxer brand. The brand’s success is recognition of how we’ve served our customers, the robust business model we have built and most importantly, our ability to trade successfully against other competitors and formats.

“Boxer started off as more of a rural or smaller town operator in towns like Matubatuba, Nqutu, Ulundi, and Burgersfort. We continue to open stores in similar under-serviced towns and locations. However, we are now also in the major CBDs of Durban, Johannesburg, Tshwane, Mbombela, and Bloemfontein, as well as many townships across the country.”

Boxer has on average added a new store every week for the last 3 financial years and has experienced a 14% CAGR in store numbers over the same period. By the end of this financial year (FY25), it expects to add 65 new stores. The medium-to-long-term aim is to double its store footprint by opening 60 to 70 stores a year for the next six to seven years.

At the beginning of this year, Pick n Pay announced its two-step recapitalisation plan to strengthen the Pick n Pay Group’s balance sheet. Step one was completed three months ago, with its successful R4 billion Rights Offer being 106% oversubscribed, which saw the Pick n Pay Group returning to a positive equity position of R2.9bn.

Step two is now underway, with the execution of the Boxer listing. Proceeds received from the Boxer IPO will be used by Pick n Pay to settle the Pick n Pay Group’s outstanding debt and to reinvest in the core Pick n Pay supermarket business.

Pick n Pay CEO Sean Summers said: “Boxer offers an unmatched customer offer, and this is evident in their incredible growth. Having been there when we bought Boxer, it is very exciting to see the business come full circle. The Boxer IPO will increase their profile and visibility, providing Boxer with access to a large pool of capital for growth. The IPO will clearly demonstrate the worth of the Boxer business, unlocking value for Pick n Pay shareholders over time. The initial capital raised from the listing will mean Pick n Pay will be debt-free, with a strong balance sheet and a significantly reduced interest bill, and in a position to accelerate its turnaround, driving long-term sustainable growth for all our shareholders.”

The future looks promising for Boxer as it is well-positioned to access both the formal and informal grocery market. Boxer intends to double its revenue over an estimated five-year horizon. It aims to maintain a steady pace in store rollouts, strong mid-single-digit like-for-like sales growth, and consistent profitability.

Participation by qualified investors in the offer for Boxer shares opened today, 11 November 2024, and will close at 12noon on Friday, 22 November 2024.

The publication date of the final offer price and final number of offer shares will be released on Monday 25 November and Boxer will officially list on 28 November 2024.

Full details of the Offer are set out in the Pre-Listing Statement available on both the Boxer (www.boxerinvestor.co.za) and Pick n Pay (www.picknpayinvestor.co.za) Investor Relations websites.