Food for thought for investors seduced by float
"There were too many expectations of a quick, easy, day-one profit and that just hasn’t materialised."
Ed Glennie, Hobson Wealth
Many first-time investors in My Food Bag were left disappointed as its shares fell after listing on the stock exchange yesterday amid high expectations.
The shares opened trading at $1.76, down five per cent on the initial public offer price of $1.85, and fell further to $1.69 by 2pm. Across the Tasman the stock fell A27c, or 14.6 per cent, to A$1.58 on the ASX.
The company had sold 184.9 million shares to institutional and retail investors in an IPO that was oversubscribed, meaning some investors had their allocations scaled back.
Ed Glennie, investment strategist at Hobson Wealth, said he was “surprised” to see My Food Bag’s share price open lower.
He said it would be disappointing for those who had already invested in the company, but buyers yesterday could see it as great value, depending on where the share price settles.
“It does show that people were more sceptical about the growth prospects than what we thought coming into this. If you’re the NZX and the sellers, you’ll be a bit disappointed because you wanted day-one investors to perform well,” Glennie told the Herald.
“There were too many expectations of a quick, easy, dayone profit and that just hasn’t materialised. There were too many people thinking that [the stock] would do really well because it is My Food Bag — you’ve got the Sharesies phenomenon, a lot of retail engagement and interest, but they may not necessarily be longterm holders.”
Leighton Roberts, co-founder of Sharesies, said around 7,500 people applied for My Food Bag through the investment platform, but the company expected more interest.
“This wasn’t a particularly heavily subscribed one by our investors, interestingly,” Roberts said, adding that the take-up might have been affected by crossover between its clients and My Food Bag customers, who were also offered direct access to the shares. Scaling meant Sharesies customers received 72 per cent of what they applied for.
Roberts said
Sharesies customers
had actively taken part in all the capital raisings the platform had been able to offer.
“Sharesies investors get the ups and downs of the market, and have ridden a few waves now, so I think it is unlikely to dampen their appetite too much.
“A few who missed out on the IPO are coming in now — but [there is] very little sell or ‘panic’ sell-off happening from Sharesies investors.” Glennie said there had
been a lot of sellers on the opening morning.
The sharemarket has been weaker of late, not helped by lockdown, so that could be a reason for the lower price, he said.
My Food Bag had been pondering a market float for about three years, but began working in earnest towards it in mid-2020.
Chief executive Kevin Bowler said it had always been a dream among founders Cecilia and James
Robinson and Theresa Gattung for the firm to be a public company New Zealanders could invest in.
“I think this is a great point in our history,” Bowler told the Herald on Wednesday.
In a statement issued before listing yesterday, chairman Tony Carter welcomed all new shareholders to the My Food Bag family.
“Today marks the culmination of eight years’ work,” Carter said. “We’ve grown from a Kiwi start-up beginning life on the kitchen bench to becoming a New Zealand food powerhouse, inspiring thousands of Kiwi families to eat better each night of the week.” While the majority of shares issued in the IPO went to institutional investors, there was also an offer to My Food Bag customers who had registered interest in the investment.
A My Food Bag spokesperson declined to say how many customers took part in the float, although it has been reported that more than 10,000 customers and staff registered interest.
Most of the $342m IPO proceeds went to shareholders selling their holdings, including private equity firm Waterman capital, which got $193.9m from the float.
The original shareholders retained a roughly 25 per cent stake among them while Milford Funds, Harbour Asset Management and Investment Services Group picked up 18 per cent between them. Each existing shareholder has agreed not to sell their remaining shares until My Food Bag announces its result for the March 2022 financial year.
Last year My Food Bag made a profit of $8.2m and had revenue of $153.3m. It forecasts revenue rising to $189.5m in 2021 and dipping to $186.4m in 2022. The company expects net profit in 2021 of $800,000 to be adjusted on a pro forma basis to $15.6m, rising to $20.1m in 2022.
The investment document showed My Food Bag has been able to pay a regular dividend since 2018. It paid out $3.4m in that year, $3.6m in 2019 and $8.4m in 2020.
The company will pay $13.3m to existing shareholders in the year to March 31, 2021.
Five straight home defeats for the first time in the club’s 128-year history. More than 10 hours since a goal from open play at Anfield.
The stadium that was once a fortress for Liverpool is the now the scene of a scarcely believable implosion by the soon-to-bedeposed English champions.
Liverpool’s 1-nil loss to Chelsea yesterday continued a staggering run of home form that came after Jurgen Klopp’s team went 68 games in a row unbeaten at Anfield.
Formerly the owner of one of Europe’s most devastating attacks, Liverpool only managed one effort on goal against Chelsea.
Mohamed Salah was substituted after an hour; Sadio Mane and Roberto Firmino barely threatened either. Mason Mount scored the winner in the 42nd minute, cutting in from the left and curling home from the edge of the area for a goal that sent Chelsea into the top four and dropped Liverpool to seventh place. Eight months after winning the Premier League by 18 points, Liverpool is 22 points behind first-place Manchester City.
New-look attack
For the first time this season, Tottenham manager Jose Mourinho started a match with Harry Kane, Son Heung-min, Gareth Bale and Dele Alli as the team’s front four. None of the quartet scored, with Tottenham relying on an own-goal to edge past Fulham 1-nil.