Synlait Milk jumps 19 percent in NZX debut

Tuesday 23rd July 2013

Synlait Milk jumped 19 percent in its NZX debut after raising $75 million in an initial public offering that was restricted to clients of brokers and institutional investors.

The shares first traded at $2.62 compared with the IPO price of $2.20. They were last at $2.75, valuing the company at $402 million.

Synlait Milk will use the $75 million raised to repay debt and help fund construction of a new lactoferrin extraction and purification facility, an on-site blending and consumer packaging plant, a new dry store, a quality testing laboratory, a butter plant, and a new spray dryer, according to the prospectus. Existing shareholders took advantage of the sale to sell down their own holdings, raising $38.7 million.

The debut is comparable with that of the Fonterra Shareholders' Fund last November, where the units jumped 22 percent when they began trading. Companies coming to market since then have had a mixed performance. MightyRiverPower last traded at $2.37, below its $2.50 IPO price, while Wynyard Group was recently at $1.09 after selling in its IPO at $1.15.

Synlait has attracted foreign investment including China's Bright Dairy & Food, which was diluted down to 39 percent in the float, Netherlands-based cooperative Royal FrieslandCampina with 7.5 percent and Japan's Mitsui & Co on 8.4 percent. Managing director John Penno has 5.4 million shares, or 3.7 percent.

"We are fully confident that as a trusted supplier of ingredients to some of the world's leading milk-based health and nutritional brands Synlait Milk is on track to deliver value for all stakeholders now and into the future," Penno said in a statement today.

BusinessDesk.co.nz

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