Family start-up Dis-Chem Pharmacies debuts on JSE

Dis-Chem is tapping an uncertain equity market as it looks to take on larger rival Clicks Group and retailers Shoprite and PnP.

Picture: Supplied

JOHANNESBURG – South African drug store chain Dis-Chem made its debut on the Johannesburg bourse on Friday, giving its founders a chance to partially cash in on their investment and bring a rival to the main pharmacy merchant on the bourse.

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 ($1 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 it had sold a 27.5% stake to investors at R18.50 per share, valuing the company at almost R16 billion.

It is the second largest IPO on the bourse this year after food services business Bidcorp, which made its debut in May at a valuation of around R90 billion.

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 R23 billion.

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

Dis-Chem said in a statement it plans to expand even further, opening eight stores during the six months ending to the end of February 2017 and at least 18 stores during the financial year ending 28 February 2018.

Goldman Sachs, Investec Bank, and Standard Bank are the listing’s joint global coordinators and joint bookrunners alongside Bank of America Merrill Lynch.