Dis-Chem share sale attractive, say experts

Dis-Chem’s proposed JSE listing will be welcomed by investors, given the strong reputation and management behind the retail pharmacy, according to analysts.

The chain has been pitching itself to potential investors as it gears up for an initial public offering (IPO) on the JSE.

"We can confirm we have appointed advisers to take us through the IPO process," said Dis-Chem director Rui Morais.

Sasfin Securities senior analyst Alec Abraham said whether the listing is to raise capital for expansion, or whether it is an exit strategy for the founders, Ivan and Lynette Saltzman, its reputation and positioning will make it attractive to investors.

"Investors will look to Dis-Chem to diversify their exposure seeing that there are not so many direct pharmaceutical retailers like it on the market," he said.

The chairman of Regarding Capital Management (RECM), Piet Viljoen, said: "The listing of Dis-Chem is exciting as the company has been growing over the years while also expanding its market share … making it the kind of company that the market will like."

RECM owns a minority share in Dis-Chem through a private equity company, Fledge.

Dis-Chem, which operates in the same market as the health and beauty company Clicks Group, is the second-largest retail chain of chemists.

It has 89 pharmacies with dispensaries across the country.

"There is not a direct play-off between Clicks and Dis-Chem," said Kyle Rollinson of Avior Capital Markets.

"There is still room for growth for both companies."

If the retailer listed, it would be "a success".

However, according to an informed source who wishes to remain anonymous, the proposed IPO could stumble because the share price potential to which investors will be willing to subscribe might not meet Dis-Chem’s expectations.