Pick n Pay is exiting Nigeria by selling its 51% stake in a joint venture, as confirmed by CEO Sean Summers. The retailer, which has two stores in Nigeria, is also preparing for an IPO of its discount chain Boxer, with expected proceeds between R6 billion and R8 billion. This IPO aims to support the company in alleviating debt and revitalizing its core supermarket operations.
Pick n Pay, the South African grocery retailer, has announced its decision to exit the Nigerian market by divesting its 51% stake in a joint venture, as part of a strategic restructuring beyond its home country. According to CEO Sean Summers, this move comes less than five years after the retailer’s initial entry into Nigeria through a partnership with A.G. Leventis (Nigeria), where it currently operates two stores. In tandem with this decision, Pick n Pay has revealed plans to launch an initial public offering (IPO) for its discount grocery chain, Boxer, in Johannesburg. The anticipated base size of the IPO is expected to be at the higher end of the company’s guidance, with projected proceeds estimated between R6 billion and R8 billion (approximately $339 million to $452 million). Furthermore, the IPO will feature an overallotment option that could potentially add up to 500 million rand through the issuance of new shares, ensuring price stability should demand surpass initial expectations. This public offering is pivotal to Pick n Pay’s two-step recapitalization strategy aimed at alleviating debt and revitalizing its underperforming core supermarket operations, while concurrently establishing a market value for Boxer that accurately reflects its promising growth and return on invested capital.
The decision by Pick n Pay to exit Nigeria underscores significant market challenges faced by international retailers in the region. Since its launch in Nigeria, the retailer has grappled with a competitive landscape and operational hurdles, prompting a reevaluation of its international strategy. Accompanying the exit from Nigeria is the forthcoming IPO for Boxer, which represents a vital component of Pick n Pay’s efforts to finance its operations and improve financial stability. A successful IPO is crucial for enhancing the company’s capital structure amid its broader restructuring efforts.
In summary, Pick n Pay’s strategic withdrawal from the Nigerian market and the concurrent IPO for Boxer reflect the company’s proactive measures in addressing its financial challenges and restructuring its business model. By selling its stake in Nigeria, the retailer aims to refocus its efforts domestically while securing necessary capital through the anticipated IPO, setting the stage for future growth and stability.
Original Source: www.sabcnews.com
