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SHOPRITE It will be fascinating to see whether this supermarket group gears up its balance sheet now that it is going to remain listed.

The question arises because Shoprite chairman Christo Wiese and management have agreed in principle to optimise the capital structure, believing that taking on a heavy debt burden is the way to enhance value. That it intended the debt to pay for the private equity takeout of the retailer is neither here nor there.

While there is no demand from investors for Shoprite to take on anything near an 80 percent debt-to-equity ratio, many believe that in times of strong earnings and relatively low interest rates this is the optimal way to use the balance sheet.

Wiese says he’s sure this is one possibility the company will look at, but there are no immediate plans to do so after a gruelling and lengthy process to delist.

Shoprite could use borrowed funds to pay for expansion plans, although after cautiously building up a network of stores – albeit a far from comprehensive one – across the risky continent, it may not have any need for big capital expenditure.

Moreover, unlike rival Pick ‘n Pay, it has already invested heavily in centralised distribution centres.

A more likely use of these funds would be to return them to shareholders, either through a share buy-back or a special dividend.

That would leave some change for whatever limited expansion plans it may have up its sleeve.

But what Shoprite chooses to do about gearing may answer another question. If the grocer does not take on any extra debt, this may simply indicate that the rationale for the failed Brait-led buyout was a belief that it could buy it on the cheap, rather than extract the benefits of taking on significantly more debt.