Dis-Chem worth R20bn on debut

COMPANIES / 18 November 2016, 11:07am
Business Reporter

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Dis-Chem pharmacy in Canal Walk. Picture Henk Kruger/Cape Argus


Johannesburg - One of SA’s largest pharmacy chains, family-owned Dis-Chem, on Friday morning listed on the JSE as it seeks to boost its growth plans.

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The company, which announced its intentions earlier this month, intended raising R5 billion on listing through selling a 27.5 percent stake, at between R16.25 and R20.25, valuing the company at as much as R20 billion.

Reuters reports that, upon listing, its shares opened at R23.26, valuing it in its target range. However, Dis-Chem's share price subsequently stumbled slightly to R21.50.

Dis-Chem has become the 14th company to list on the bourse this year.

It was founded by chief executive Ivan Saltzman and his wife Lynette in 1978.

Dis-Chem, 66.9 percent owned by the Saltzman Family Trust, turned over R15.5 billion in the year to February from its about 100 stores, with earnings before interest, tax, depreciation and amortisation of R1.1 billion.

Its other shareholders include key management, with 23.4 percent, while the balance is held by an unnamed financial investor.

Cash raised by the listing will be used to buy back shares from existing shareholders, pay down debt and general corporate purposes.

Dis-Chem said earlier this week it had sold a 27.5 percent stake to investors at R18.50 per share, valuing the company at almost R16 billion.

The company has said its growth plans include doubling its store footprint in the next 5 to 8 years by pursuing store roll-out opportunities and converting independent pharmacies to the Dis-Chem brand.

Dis-Chem has more than doubled its store base since 2010 and tripled since 2008.

Donna Nemer, Director of Capital Markets at the JSE, says the exchange is excited to welcome Dis-Chem Pharmacies. “We are very pleased to welcome this established pharmacy and health company onto the Main Board of the JSE and hope that this listing helps Dis-Chem to further propel it on its growth journey. The Food and Drug Retailers sector remained resilient this year despite strong economic headwinds.”
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“Listing will allow us to advance and improve our strategy, and at the same time ensure that we can continue growing market share across our product offerings, as well as building on the tremendous brand positioning that has been established over the last 38 years,” says Ivan Saltzman.

Saltzman says Dis-Chem has more than doubled its store base since 2010 and tripled it since 2008. Dis-Chem plans to open a further eight stores during the six months to February 2017 and at least 18 stores during the following financial year.

Dis-Chem joins 8 companies that are listed in the Food and Drug Retailers sector of the JSE. The Food and Drug Retailers sector has a total market cap of R220.39 billion, which constitutes 2 percent of the overall JSE market cap of R13.6 trillion

Cosatu spurs on basic income calls

BUSINESS NEWS / 18 November 2016, 10:48am
Zintle Mahlati
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File picture: Steve Lawrence

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Johannesburg - Calls for a basic income grant (BIG) are gaining momentum again, with Cosatu president Sdumo Dlamini saying it should be included in the country’s comprehensive social security plan, which is currently been drawn up by government.

Dlamini said that far too many people were locked out from benefiting from the government’s social welfare plans, while they did not earn enough to make a decent living.

“The state’s approach to social protection has been fragmented and narrow. The state focused on traditional social support measures such as child support grants, old age pensions; income support for those that could not work because of sickness,” said Dlamini, speaking at labour federation Fedusa’s national congress in Johannesburg on Thursday.

Cosatu’s call is in line with that of non-governmental organisations, which believe that the country can find the money for a BIG.

Isobel Frye, who heads up the Studies in Poverty and Inequality Institute, has said before that had the basic income grant of R100, which was opposed by the government and former president Thabo Mbeki as being too expensive, been implemented in 2004, the poverty gap would have been reduced by more than 70 percent.
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Mbeki's argument was that it was an insult to give R100 to the poor even though Zola Skweyiya, who was the social development minister at the time, supported it in his personal capacity.

Dlamini said the comprehensive social security plan should also include a revamped Unemployment Insurance Fund, a comprehensive retirement scheme and National Health Insurance.

“We have also called for a single national pension scheme with a bias towards a strong defined benefit model; the consolidation of all existing pension funds, both in the public and private sector, into a mandatory publicly-administered and managed pension scheme,” said Dlamini.

The federation also wants the retirement fund industry to transform, with a focus on uplifting black asset managers by providing bursaries and improving the black economic empowerment score card.