Retail investors, many of whom are loyal Dis-Chem customers, are up in arms because they received no shares in the placement of 236.8-million Dis-Chem shares ahead of Friday’s listing on the JSE.

It now looks as though a listing intended to enhance the retailer’s profile with investors and customers has failed on both counts. Some disgruntled individuals are vowing to transfer their shopping allegiance to Clicks.

Dis-Chem would not release details about the investors who picked up the R4.4bn in shares, sparking speculation among locals that much of it has gone to powerful international funds. Some details are expected to be released on the JSE’s news service on Thursday.

On Wednesday evening, Dischem said it could not comment on individual allocations that had been made but said the offering had been for institutional investors and was not open to the general public.



"There was high demand for the Dis-Chem shares and we were multiple times oversubscribed, resulting in us having to scale back orders significantly and in many cases not being able to allocate shares," said a Dis-Chem spokesperson.

Private investor Nick Krige dismissed Dis-Chem’s explanation, saying the reference to institutional shareholders and exclusion of the general public was "boilerplate stuff to satisfy the lawyers" and was commonly included in placement documents.

The placement had been a public-relations disaster, Krige said. "Of course, Dis-Chem has the right to decide who gets the shares, but if they’re going to allocate the shares to a small group of preselected investors why canvas brokers to encourage applications from all comers and hold open presentations?"

A well-run company had just destroyed lots of goodwill, Krige maintained.

A private wealth fund manager said he had received a lot of orders from clients, some of whom had sold other shares to take up Dis-Chem.

"We put in a large order and indicated we were happy to pay up to the R20 initially flagged, but we got absolutely nothing," said the fund manager, who could not be named.

He queried whether the bookbuilders, Standard Bank, Investec and Bank of America, had complied with Treat Customers Fairly regulations.

An allocation to international funds, generally keen on South African retailers, might help to create a stable long-term shareholder base but risked undermining the need for liquidity.

The offer, which was finally priced at R18.50 on Monday, was reportedly seven times oversubscribed.