Pick n Pay to Exit Nigeria and Launch IPO for Boxer in Johannesburg
Pick n Pay has decided to exit its Nigerian operations by selling its 51% stake in a joint venture, as part of a restructuring strategy. The retailer is also launching an IPO for its Boxer chain in Johannesburg, aiming to raise between R6 billion and R8 billion to alleviate debt and reposition its core business.
South Africa’s prominent grocery retailer, Pick n Pay, has announced its decision to withdraw from the Nigerian market by divesting its 51% stake in a joint venture. This strategic move is part of a broader initiative aimed at restructuring the company’s operations beyond its domestic market, as stated by CEO Sean Summers. Having entered the Nigerian market less than five years ago through a partnership with A.G. Leventis (Nigeria), Pick n Pay currently operates two stores in the region. In addition to this exit, the company is preparing for an initial public offering (IPO) of its discount grocery chain Boxer in Johannesburg, indicating that the base size of the IPO targets the upper range of previous guidance. The company has estimated that the proceeds from the IPO will be within the range of R6 billion to R8 billion (approximately $339 million to $452 million). Furthermore, the statement revealed that the Boxer IPO will include an overallotment option, likely not exceeding 500 million rand, which will be facilitated through the issuance of new shares. This overallotment option allows underwriters to sell more shares than initially planned should the demand exceed expectations, thereby ensuring price stability. This IPO forms a crucial component of Pick n Pay’s two-step recapitalization strategy aimed at generating essential funds to reduce debt and address the challenges within its underperforming core Pick n Pay supermarket segment. The company also seeks to provide Boxer with a market valuation that genuinely reflects its “superior” growth and returns on invested capital.
The decision by Pick n Pay to exit Nigeria comes amidst efforts by the retailer to realign its market focus and restructure its operations for better financial health. The move is indicative of the challenges international retailers often face when expanding into new regions, particularly in markets characterized by complex operational landscapes. The upcoming IPO of Boxer underscores the retailer’s efforts to raise capital, not only to stabilize its debt but also to enhance its market competitiveness in South Africa, where it has established a stronger business base.
In conclusion, Pick n Pay’s strategic withdrawal from Nigeria signifies its intention to streamline operations and focus more effectively on its home market. The planned IPO for Boxer is a vital component of the company’s restructuring initiative, aimed at addressing financial burdens and enhancing market positions. This dual approach reflects the retailer’s commitment to sustaining a strong competitive edge while navigating the complexities of expansion and operational management.
Original Source: www.sabcnews.com
