It will be all about the alignment of farmer and shareholder interests when Murray Goulburn managing director Gary Helou meets Sydney fund managers on Friday.
MG will lodge official documents for its $500 million new ASX-listed fund on Friday ahead of an institutional book-build on June 29 and 30 and targeted July 3 listing.
Street Talk can reveal units in the MG Unit Trust are expected to be priced at up to 18-times forward profit or about $3.50 each, and promise up to a 7 per cent dividend yield before franking.
Helou's pitch is expected to highlight how MG has decided to split profits between farmers and investors and show that both sets of stakeholders will see the same profits and losses price of milk rises and falls.
Sceptical fundies will be looking to find holes in the profit sharing structure and will want to see exactly how it is different to Fonterra's Fonterra Shareholders' Fund where high milk prices are good for farmers but bad for trustholders, and vice versa.
MG's brokers Macquarie, Morgans, Evans & Partners and PAC Partners (along with co-manager Bell Potter) have spent the past fortnight explaining the structure to about 100 potential investors across Australia, New Zealand, Asia and Europe.
Macquarie analysts valued the new units at $2.50 to $3.60 each, or 15.2 to 19.3-times expected 2016 financial year profit. Morgans' well-regarded Belinda Moore said they were worth $2.80 each and put a $1.4 billion equity value on the dairy company.
The IPO price range is expected to be at a slight discount to the above valuations.
The reports showed MG expected to supply 37 per cent of the country's milk in the 2014-15 financial year and would have $3 billion sales.
Moore pedalled MG's diversified geographic, product and customer mix and said the dairy producer has ability to flex manufacturing of branded products to take advantage of short-term price fluctuations.
Selling into Asia is also a big part of the pitch.
The offer will also be targeted towards retail investors familiar with MG's brands, as can be seen through the retail-heavy broker syndicate. Retail brokers were preparing to bombard clients come Friday morning, pointing to the yield and capital expenditure.
