Christopher Adams

The Business Herald’s markets and banking reporter.

Veritas keen for acquisitions after Mad Butcher listing

NZX chief executive Tim Bennett says the Mad Butcher offer shows the level of appetite for investments. Photo / Sarah Ivey
NZX chief executive Tim Bennett says the Mad Butcher offer shows the level of appetite for investments. Photo / Sarah Ivey

Veritas Investments, which completed its purchase and backdoor listing of the Mad Butcher yesterday, is looking to acquire additional businesses, possibly in the retail sector, says chairman Mark Darrow.

But he said the firm's "short-term responsibility" was growing the meat seller it bought for $40 million off Michael Morton, who acquired the business from founder Sir Peter Leitch in 2007.

"In the first 12 to 18 months our focus is going to be around the Mad Butcher and food," Darrow told the Business Herald at a listing event in Auckland. "Beyond that we'll look at other things on their merit."

He said Veritas did not want to have a "disparate" portfolio of investments.

"We want our [investments] to be reasonably well honed within fairly tight sectors," Darrow said.

The company carried out a $25 million share offer to partly fund its purchase of the Mad Butcher and those shares, which were issued at $1.30 apiece, were allotted yesterday.

Veritas paid for the transaction with $20 million in cash - as well as $20 million in shares - to Morton, who remains chief executive of the retailer.

Darrow said he did not agree that backdoor listings had a bad reputation in New Zealand. "I was very heavily involved with the Charlie's reverse listing ... and that was very successful."

Juice maker Charlie's was acquired by Japanese brewer Asahi for $129.3 million in 2011.

NZX chief executive Tim Bennett, who attended yesterday's listing event, said the Mad Butcher offer had been subject to the same level of scrutiny as any other new listing.

"Given this was the first transaction of its type under the new regulations I think it got more scrutiny than it normally would so I don't think there should be any concerns about [it being a backdoor listing] at all," Bennett said.

He said the fact that the Mad Butcher offer was highly oversubscribed demonstrated the level of appetite for new investment opportunities.

"This is a business that people understand ... obviously it's got some good growth prospects," Bennett said.

There is scope to open 34 new stores over the next five years, Morton has said.

Veritas shares closed at $1.58 last night, which was 21.5 per cent higher than the offer price.

- NZ Herald

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