Australia: Costa Group IPO expected at lower end of price range
Update: The company has announced a final listing price of AUD$2.25 per share, giving the group a value of AUD$850 million.
The initial public offering (IPO) of Australia's largest integrated produce company may be somewhat tainted by stock market concerns over China and the Grexit, with speculation stock will sell at the lower end of the slated AUD$2.20-2.70 price spectrum.
A source close to Reuters said Costa Group's share price would likely open at AUD$2.25, while The Australian reported the price could hit the AUD$2.30 mark.
Trading is set to begin on July 24 on a conditional and deferred settlement basis.
The Australian reported it was understood the float's lead managers Goldman Sachs and UBS had received large orders from the U.K. and the U.S., after roadshows prompted strong interest in the company's prospects in the Moroccan and Chinese fruit businesses.
Reuters reported the value of share floats in the Australian Stock Exchange (ASX) was down by a third year-on-year in the first half of 2015.
Costa - to be traded under the code 'CGC' - accounts for 45% of Australia's blueberry supply in a joint venture partnership with U.S. company Driscoll's, and it also has a stake in Moroccan blueberry grower African Blue. The group also grows 42% of Australia's mushrooms, 16% of its citrus with a strong export focus as well, and produces 18% of the country's hydroponic tomatoes.
Costa has forecast an EBITDA of AUD$70.6 million for the 2015 financial year, and estimates a rise to AUD$90.4 million in 2016.
The company also has a joint venture with cold chain company Polar Fresh, as well as 'strategic alliance' partners Monterey Mushrooms and California-based fruit group Sun World.
Ahead of planning the IPO, Costa shut down two of its grape farms, citing a "changing production landscape in the industry".
Photo: Costa Group