News: Vitaco Holdings to raise $231.6M through fully underwritten IPO

Nutritional products business Vitaco Holdings Limited is raising up to $231.6 million through a fully underwritten initial public offering priced at $2.10.

The offer of 110.3 million shares is underwritten by JP Morgan and Citigroup Global Markets. These will represent 79.3% of the shares on issue on completion of the offer.

Its product portfolio includes a range of well-known and respected brands across its two divisions – Vitamins and Supplements (Healtheries, Wagner and Nutra-Life) and Sports and Active Nutrition and Health Foods (Aussie Bodies, Musashi, Balance, Bodytrim, Healtheries and Abundant Earth).

The company has longstanding relationships with a number of its customers in Australia and New Zealand. Large customers include Woolworths, Coles and Chemist Warehouse (via Sigma Pharmaceuticals) in Australia, and Progressive Enterprises and Foodstuffs in New Zealand.   

It has enjoyed sales growth in recent years with the company generating from FY2013 to FY2015 generated annualised revenue and EBITDA growth of 8.6% and 9.1%, respectively.   

Vitaco is now forecasting pro forma FY2016 revenue of $211.3 million, up 22.6% over the previous year and a 15% increase in EBITDA to $23.7 million.

The company produces the majority of its products from its sites in Auckland, New Zealand, which assists in controlling costs, maintaining high levels of quality control and maximising speed to market.

It also has a track record of successful new product development which is expected to remain a core element of the Vitaco Group’s strategy in the medium term and a key driver of growth.

Highlighting this, more than 20% of Vitaco’s revenue for FY2015 was derived from products launched in the preceding three years.   

Vitaco expects continued strong growth in consumption of its products in its core markets in Australia and New Zealand.

The company is also well-positioned to benefit from the significant growth in demand for health and wellness products in Asia.

Proceeds will be used to repay existing debt facilities; pay existing shareholders for the transfer of their shares; and, fund the buyback and/or cancellation of convertible preference shares and mandatory convertible notes.

The company will trade as VIT on the Australian Securities Exchange.