Ingham’s chickens to fly in ASX float, TPG to get golden egg
Australia’s largest poultry company, Ingham’s, intends to float on the Australian Securities Exchange (ASX) in what could be the biggest Initial Public Offering for 2016.
Ingham’s owner is currently the private equity firm TPG, which acquired the business from the Ingham family in 2013 for approximately AUD $850 million.
By comparison, the proposed listing will now be valuing the business at between AUD$1.3 billion and AUD $1.5 billion. TPG is expected to sell between 50 and 70 per cent of its share in the business.
The shares in the ASX-listed Ingham’s are expected to sell for between AUD $3.57 and AUD $4.14 each. The float is planned for November 2016 with TPG aiming to raise up to AUD $1.12 billion in capital from the float.
Chairman of Ingham’s, Peter Bush, said in the Ingham’s prospectus that since being acquired by TPG in 2013, Ingham’s has delivered strong earnings growth.
“Underlying industry growth remains robust, supported by strong macroeconomic drivers, including population growth, relative affordability of chicken, and consumer trends, such as a desire for foods that improve health and well-being, demand for convenient meals and increasing consumer interest in food provenance and animal welfare,” Bush said.
“In addition to strong earnings growth, Ingham’s has high cash flow conversion. Ingham’s strong operating cash flows will be used to fund its future growth, including facility modernisation and expansion projects, as well as support a forecast annualised dividend yield for FY17 at the Indicative Price Range of 4.4%-5.0%, with a planned future payout ratio of 65-70% of net profit after tax. Ingham’s expects to be in a position to pay fully franked dividends in FY17,” Bush stated.
Ingham’s was founded in 1918 in Sydney’s South-west by Walter Ingham, who bought six hens and a rooster for his son. Ingham’s son, also called Walter, grew the business, and passed it onto his sons, Jack and Bob, when he died in the 1950s. Jack Ingham died in 2003, and Bob continued to run the business until July 2012, when he put the company up for sale.
Today Ingham’s operates both across Australia and New Zealand and has one quarantine facility, 10 feedmills, 74 breeder farms, 11 hatcheries, 225 predominantly contracted broiler farms as well as seven primary processing plants, seven further processing plants, one protein conversion plant and nine distribution centres.
The Ingham’s owner since 2013, TPG, is a global investor group based in New York. TPG came to prominence in Australia after it acquired the Australian retail department chain, Myer, in 2011, and has numerous Australian investments.