DISCOUNT food retailer Shoprite made a #9.8m cash-call yesterday,

which would normally have sent the shares plummeting. Instead, they

soared 65p to a 733p peak placing a #115m value on this distinctly

unusual company, which is based in the Isle of Man but is intent on

flooding Scotland with its stores.

The company launched its campaign in 1990 by paying Safeway #1.1m for

a five-acre distribution centre in Cambuslang, then opening shops at

Linwood and Bridge of Allan.

Further expansion last year took the number to 35, and the intention

is to add another 22 this year with the new funding.

Shoprite's secret is not so much that it piles 1200 grocery lines high

and sells them cheap, but rather that it saw that others had hit the

English discount market. Sensibly it targeted Scotland instead.

Not least because there was no lack of low-cost sites available, even

if planning delays are apt to cause frustration. A store can still be

opened for from #500,000 to #750,000, which is a far cry from rivals'

gleaming supermarkets which can involve a #22m investment.

Interestingly, it is a case of second time round for the Nicholson

family, who own 60.7% of the equity, because the late Ken Nicholson

helped to start the #1220m Kwik Save discount star before retiring to

the Isle of Man with a stake in a holiday camp, four petrol stations,

and a Mercedes dealership.

Sons Deryck and Ian Nicholson learned marketing and store operations

respectively, before going into retail food on their own account. In

1989 they reversed their interests into the family business. Shrewd and

cautious operators they tend to shun publicity, although City analysts

are invariably impressed.

There has certainly been no slowing Shoprite enterprise recently, as

rivals know to their cost, with turnover up from #20m to a recent #85m,

profits trebled, and assets jumping from #6m to over #25m.

The shares, which stood at 100p in early 1991 and got to 553p last

summer, went shot up yesterday until late profit-taking left them 65p up

overall at 733p.

The main problem with the stock is that solid family and institutional

stakes do not leave many to trade. The Nicholsons are not taking up any

of the new stock which will help. However, as the issue is through a

placing and open offer, the shareholder register is unlikely to multiply

beyond existing institutions.

Especially as the new Ordinary at 645p are offered only on the basis

of one for every nine shares held, which will hardly create much paper.

The indicated ex-rights price would be 730p, with scope for an early


Last night Deryck Nicholson, chairman and managing director (his

brother is joint deputy MD), said that trading during the key Christmas

period had been satisfactory and in line with expectations.

A stated policy of pegging gearing to 60% was 6% higher at the

year-end, which the new money will reduce short-term. Expansion by

in-store concessions is working well and there are close links through

joint ventures with Iceland Frozen Foods and other complementary