Dis-Chem debuts on the JSE

Shares open at R23.26

DRUG-store chain Dis-Chem has made its debut on the Johannesburg bourse, giving its founders a chance to partially cash in on their investment and bring a rival to the main pharmacy merchant.

Founded by chief executive Ivan Saltzman and his wife, Lynette, Dis-Chem has grown from a start-up in 1978 to a major health products retailer with annual sales of more than R15 billion.

Dis- Chem is tapping an uncertain equity market as it looks to take on larger rival Clicks Group and retailers Shoprite and Pick n Pay, which also have pharmaceutical retail operations.

Dic-Chem’s shares opened at R23.26, valuing the firm at around R20 billion, before easing slightly to R20.70.

The firm said earlier this week that it had sold a 27.5 percent stake to investors at R18.50 per share, valuing the company at almost R16bn .

It is the second largest initial public offering on the bourse this year after food services business Bidcorp, which made its debut in May at a valuation of around R90bn.

However, it is dwarfed by Clicks in terms of both store network and market value. Clicks operates more than 700 outlets, bringing in annual sales of about R23bn.

The listing throws Dis-Chem into an edgy stock market as investors fret over unemployment of more than 25 percent and weak growth in Africa’s most industrialised country.

Dis-Chem said it planned to open eight stores during the six months to the end of February and at least 18 stores during the financial year ending February 28, 2018.

Goldman Sachs, Investec Bank, and Standard Bank are the listing’s joint global co-ordinators and joint book-runners alongside Bank of America Merrill Lynch. – Reuters