By: Vernon Pillay – IOL Business

Beleaguered Pick n Pay has raised R8.5 billion after it sold a 34.4% stake in its low-cost chain, Boxer, in an initial public offering (IPO).

According to the grocery outlet, the shares sold between R42 and R54 to institutional investors only on Monday and around 157.4 million shares were sold.

The IPO sale of Boxer has been a main focus for Chief Executive Officer (CEO) Sean Summers.

This is one of his major interventions in his recapitalisation plan as Pick n Pay needs a huge amount of cash to help lower its group debt and save its brick and mortar flagship stores.

The company has already raised R4 billion through a rights issue.

Boxer CEO Marek Masojada said that the IPO illustrated that local and international investors have faith in Boxer's equity story and growth trajectory.

Boxer's shares are scheduled to start trading on the main board of the Johannesburg's Stock Exchange (JSE) on November 28, with a secondary listing on the local alternative market.

South African investors can start purchasing Boxer shares when they hit the main board on the JSE on November 28.

Hope on the horizon?

In late October, Pick n Pay said it was making “encouraging progress” in its turnaround.

Summers forecast a 50% full-year decline in trading losses from its Pick n Pay supermarkets segment but said that the worst of the group losses were behind it.

The grocery chain’s losses from 26 weeks to August 25 widened by 44.8% to R827.4 million.

Group turnover was higher by only 3.7% to R56.1 billion.

“Exactly a year ago, when I re-joined Pick n Pay, I predicted this (the turnaround process) would be a multi-year journey and that it would get worse before getting better. Our earnings for the first half reflect this, and I am confident that the worst is behind us now,” Summers said.

The group still had some 25-30 non-profitable stores to deal with in the second half, and he expected the group would benefit from cost reductions in the second half.

Black Friday and festive season trading were expected to be major drivers of second-half earnings, Summers added.

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