Investors overdose on Dis-Chem's JSE debut
The sector is attractive for those willing to pay for a pharmaceutical retailer
Dis-Chem, South Africa's second-largest pharmaceutical retailer after Clicks, made its debut on the JSE on Friday, gaining as much as 27% to R23.45 as private investors dived into the stock. The share beat the initial offer price of R18.50, which valued the business at about R16-billion, showing that the sector is attractive for those willing to pay for a pharmaceutical retailer. This week, Dis-Chem placed 236.8 million shares in a private placement, the equivalent of a 27.5% stake in the business, with institutional investors, raising R4.4-billion. Alec Abraham, a senior equity analyst at Sasfin Wealth, said that because large institutions were favoured in the share allocation, demand for the stock pushed up the share price on Friday. "There were a lot of private individuals who would've liked shares but they couldn't get any allocation ... that demand is pushing up the price today [Friday]." Abraham said that from an earnings-growth momentum point of view, Dis-Chem had a higher ea...
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