Stock slips
NZ King Salmon shares dip on debut
New Zealand King Salmon shares slipped back on their NZX debut after the fish farming company raised more than $70 million to fund its growth and allow existing shareholders to reduce their holdings.
The stock first traded at $1.16 on the NZX, before eventually closed at $1.10 — down 2c from the offer price.
The company sold about 69 million shares in the IPO, raising $30m of new capital to repay debt, and to fund future investment and working capital, while Malaysianowned Oregon Group reduced its holding to about 40 per cent, Direct Capital sold $45m of shares and existing minority shareholders reduced their stakes.
Chairman John Ryder said the IPO gave King Salmon “a strong platform for investing in aquaculture growth”.
“The planet’s resources need careful management, at the same time as the world’s growing population is crying out for increased nutritious food production,” Ryder said. “Farmed salmon in particular represents an efficient and sustainable way of meeting those needs.”
King Salmon plans to use $16.7m of the new capital raised to repay bank debt and shareholder loans, and $8.2m to partially fund a new farm, while $5.1m will be gobbled up by offer costs.
The offer attracted food investor China Resources Ng Fund, which bought a 15 per cent of apple exporter Scales Corp from Direct Capital in March, and the New Zealand Superannuation Fund. The Chinese firm took a 10 per cent stake and the New Zealand Superannuation Fund will hold 5.5 per cent.
King Salmon is projecting revenue of $130.1m in the year ending June 30, 2017, for a profit of $10m, compared to a $2.6m profit on sales of $114.1m in 2016. That’s expected to rise again in 2018, generating revenue of $143.6m and a profit of $14.1m.
The offer document forecasts dividends of $5m in 2017 and $5.6m the following year, implying a gross dividend yield of 4.5 per cent and 5 per cent respectively.
The company operates eight farms in the Marlborough Sounds and has three new farms coming on stream.
The consents for the new sites were opposed by environmental groups all the way to the Supreme Court in 2014, which succeeded in winning a protection of “outstanding landscapes” and ruling out another proposed farm.
King Salmon was advised on its IPO and listing on the NZX and ASX by law firm Chapman Tripp. Partner Rachel Dunne said 2016 had been “another sluggish year for IPOs, with only three on the NZX main board this year — drawing even with 2015’s total tally”.
“However, there are indications we may see further activity before the year is out to surpass 2015 by a small margin,” Dunne said. “It is heartening to see companies like New Zealand King Salmon that offer investors an opportunity to invest in New Zealand’s primary sector choosing to list.”