Inghams in line to be Australia’s biggest IPO for 2016
US private equity firm TPG is selling between 50 to 70 per cent of Australia’s largest poultry producer Ingham, giving it a value of between $1.33 and $1.53 billion.
According to the prospectus which was lodged yesterday ahead of the float, its shares will be priced at between $3.57 and $4.14.
The pricing range is somewhere between 13.5 times and 15.5 times the company’s forecasted earnings.
TPG expects to raise between $767.6 million and $1.12 billion from investors, making it the biggest float for 2016.
Inghams’ net profit is expected to grow 19 per cent for the 2017 financial year. Volume growth is forecast to come out at 7.7 per cent over the same period.
The final pricing will be determined at a bookbuild on November 2 and 3 which, if successful, will see Inghams listing on November 7.
According to the Australian Financial Review, AustralianSuper has pre-committed to the float.
Inghams is one of two major players in Australia’s $6 billion chicken-meat industry, competing against family Baiada Poultry. The two companies have between them 73 per cent of the market.
TPG bought the company from Bob Ingham in 2013 for $880 million and installed new management, selling off real estate and feed mills and then leased them back for 20 years. This reportedly generated the company around $600 million.
With revenue sitting at $2.3 billion, Inghams employs more than 8000 people at 340 poultry farms, processing, and feed mills across Australia.
The poultry industry could attract investors because of growing consumer demand with the relative price attractiveness of chicken over other protein foods.
Australians already consume about 45 kilograms of chicken a year with 80 per cent of the produce sold fresh.
The industry is strong with little or no import competition and import bans on most countries except for New Zealand.
by Leon Gettler, October 13th 2016
