Discount retailer to raise £250m to repay loans and expand stores and stock

Poundland owner Pepco to raise £250m from a share issue to pay down debt and invest in its growing business.

The budget retailer, which owns the Dealz chain in Europe, said the move will provide it with the financial flexibility required to execute its growth strategy.

The placing consists of the issue of 25 million new shares, representing approximately 9.8% of the company's issued share capital, at a price of £10 per share. Existing investors purchased the vast majority of the shares, so Pepco’s three largest shareholders will hold more than half of the company’s stock. The placing was managed by Goldman Sachs, the group’s financial adviser.

Pepco said it would use the net proceeds of the placing to “reduce gross debt, enhancing financial flexibility and supporting the delivery of its growth strategy”.

Chief executive Andy Bond said: “This successful placing, completing our capital raise, demonstrates the strong support from both our existing and new shareholders and, alongside our recent upgrade in credit rating, further strengthens our financial position and ratings profile. The proceeds of the placing will enable us to accelerate our strategy and deliver against our future growth ambitions. We remain fully focused on leveraging our unique, differentiated business model to drive sustainable profitable growth and value creation.”

The company’s stock market value has risen by more than two-thirds in the last year

Pepco has been expanding rapidly in recent years, opening new stores in the UK, Europe and Poland. The group now has more than 3,500 stores in 16 countries.

The company’s sales have also been growing strongly, with revenue increasing by 17% to €4.2bn in the 12 months to September 2022.

Pepco said it expects to continue to grow in the coming years, with plans to open new stores and expand its product range.

About Pepco

Pepco is a discount retailer with over 3,500 stores in 16 countries. The company was founded in 1995 and is headquartered in Poland.

Pepco sells a wide range of products, including food, clothing, homeware, and toys. The company’s stores are typically located in high-traffic areas, such as shopping centers and retail parks.

Pepco is known for its low prices and its commitment to providing value for money. The company’s mission is to “make everyday shopping more affordable for everyone”.