Costa Group Ipo

Costa Group’s IPO roadshow


The Costa Group will launch the Asian and Australasian legs of its global marketing roadshow next week, as the fruit and vegetable producer prepares to list on the Australian Securities Exchange.
Some estimate the company will be worth about $900m.

Momentum is building for the $500m-plus initial public offering, to be undertaken through joint lead managers Goldman Sachs and UBS ahead of the mooted July listing.
As Goldman’s heads to Asia to market the deal, UBS meets with be meeting prospective investors in New Zealand and Australia.

Both Costa’s existing owners, Frank Costa and Paine & Partners, will retain some of their interest in the company, but exactly how much is set to be raised remains unclear.

The IPO plans have followed a dual-track process undertaken by the two banks, which tested investor appetite from trade buyers and private equity firms.
It is understood some advisers were trying to pair up buyout firms with other acquirers in an effort to put together a deal that would be attractive to the vendors.

However, the understanding from analysts is that private equity firms that circled the business — believed to be groups such as Kohlberg Kravis Roberts, Pacific Equity Partners and Champ — viewed the business as worth about $800m, below the vendors’ $1bn price expectations.

It will be interesting to see the valuation range analysts will place on the company.
Costa’s advisers were previously said to be spruiking annual pro forma earnings before interest, tax, depreciation and amortisation of $95m, despite some arguing $75m was a more realistic number.

Debate has also previously centred on whether Costa should trade on a multiple of eight or nine times, rather than the 10 times expectation of the vendors.