In two weeks, the JSE welcomes Botswanan grocer Choppies

Two weeks tomorrow, Choppies will list on the Johannesburg Stock Exchange. The grocer is listing on the South African bourse as part of its growth strategy.

The Botswanan grocer hopes to raise around R574 million through the secondary listing.

Let's take a closer look at what's going on…

Botswana’s biggest grocer will list on the JSE on 27 May

Choppies currently has “125 stores in its home market, South Africa and Zimbabwe,” reports Fin24. Through listing on the JSE on 27 May, the grocer “will sell 117.4 million new shares along with 160 million from existing shareholders”.

CEO of Choppies, Ramachandran Ottapthu, said listing on the JSE will help the company “to fast-track the continued roll-out of new stores, unlock opportunities in new markets and fund acquisitions,” says IOL. The share’s offer price will be the result of “a bookbuild process run” by Rand Merchant Bank.

The grocer, the largest in Botswana, plans to use some of the capital raised from the JSE listing to “settle existing debt of around R200 million,” says MoneyWeb.

Choppies has rapid expansion in its sights

Choppies wants to begin opening stores in “new countries such as Zambia, Tanzania and Kenya,” adds Fin24. And “nearly double its store numbers” in Botswana, Zimbabwe and SA.

By the end of 2016, Choppies plans to have opened “200 stores,” says BDLive. Stores in new territories should begin opening from the “middle of this year”.

Choppies holds its primary listing on the Botswana Stock Exchange, notes BDLive. The grocer’s market cap is around “4.5 billion pula ($0.4 billion).

Alex Abraham, senior retail analyst at Sasfin Securities, says that “Choppies price earnings ratio was too ‘rich’,” reports BDLive. Yet “its operating margin and return on equity were much in line with Shoprite” and other South African grocers.

Time will tell how investors receive the new listing on 27 May when Choppies joins the JSE.


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