Pepco Group, Poundland’s parent company, rose to 10% in its business debut in Warsaw, charging for growing demand from budget buyers during the pandemic.
The shares of the discount retailer, which was introduced to the market by Steinhoff International Holdings, were trading at 43.68 zlotys at the beginning of trading in Warsaw, 9.2% more than the initial public offering price of 40 zlotys on action.
Low-priced retailers have thrived over the past year, accelerating a shift toward frugality and discounted shopping that began during the financial crisis.
“Pepco is seen as a major representative for strong retail markets in Eastern Europe and particularly in Poland,” Jaroslaw Niedzielewski, head of equity investments at investor manager TFI Investors, said in an email . Maintaining the fast pace of sales growth can be difficult due to market saturation, he added.
Pepco did not raise money on the IPO, while Steinhoff obtained a product of 4.1 million zlotys (about 15 billion Rlles) from the stock offer to pay off the debt.
Steinhoff has been selling funds to raise funds after a 2017 accounting scandal brought him to the brink of collapse. The retailer, which still has chains such as Mattress Firm in the United States and parts of European furniture seller Conforama, needs cash to pay off its 9.5 billion euros (about $ 160 billion) in debt and is also working on a legal agreement.
The South African-based conglomerate will maintain a stake of at least 79% in the unit, whose operations include Pepco discount clothing and household goods stores in Poland, Romania and Bulgaria. It also owns the Poundland discount chain in the UK and Dealz outlets, which sell food and cosmetics in Ireland, Spain and Poland and have recently expanded to Italy.
Pepco CEO Andy Bond said at the opening ceremony that while his chain in Eastern Europe is the company’s “crown jewel”, he sees strong growth prospects in Western Europe after entering Spain in April and Italy in September.
Still, there is no guarantee that the discount retailer will be able to replicate its business model in Western Europe, Niedzielewski said. “Over the next few years, the biggest risk to Pepco’s shares is that Steinhoff is selling its stake in an effort to reduce its debt burden,” he said.
The list is in addition to a revival of IPO in Warsaw that was ignited by the offer of the e-commerce platform Allegro.eu SA last year. Four companies have raised about 19 billion RVs in the Polish capital this year, placing it ahead of other continental European locations such as Paris.
Goldman Sachs Group and JPMorgan Chase & Co. they are global coordinators of Pepco’s IPO. Barclays, BM PKO BP and Banco Santander SA are joint book brokers; Pekao Investment Banking SA and Bank Polska Kasa Opieki SA – Biuro Maklerskie Pekao are co-book runners, while ING Bank NV and Trigon Dom Maklerski SA are co-directors.