Agribusiness Scales tips plan to float

Andy Borland.

Company one of a number considering listing to take advantage of buoyant sharemarket.

Christchurch agribusiness company Scales says it is considering an initial public offering and a listing on the NZX, which would involve majority shareholder Direct Capital selling down its stake and the raising of fresh capital to pay down debt.

Yesterday's announcement ends months of media speculation that the company would seek a listing on the exchange, which it expects to happen in late July.

Scales, which was once part of failed finance company South Canterbury Finance, is 84 per cent owned by Auckland-based private equity investor Direct Capital, through its Direct Capital IV and Pohutukawa II funds as well as co-investment partners the NZ Superannuation Fund and ACC.

The rest of the company is held by senior management team members and 400 other investors.

Direct Capital intends to sell down a portion of its majority shareholding, which it bought, with other parties, for $44 million from South Canterbury's receivers in 2011.

"The fresh funds will be used to pay down debt in the first instance, which will position us for future growth," said managing director Andy Borland. "It's an opportunity to raise extra capital and to allow a sell-down by some of the existing shareholders."

Scales is one of a handful of companies that are in the throes of raising funds through IPOs to take advantage of the buoyant conditions for equities. Since the start of 2013, the New Zealand market has rallied by about 27 per cent.

Software companies Gentack and Serko have already confirmed their listing plans, and other software-related companies are understood to be waiting in the wings.

Scales - one of New Zealand's oldest companies - is involved in the apple growing, packing and exporting business, logistics, storage and food ingredients.

About 60 per cent of Scales' earnings come from the apple industry, 30 per cent from logistics and 10 per cent from ingredients.

In apples, Scales' biggest markets are the United Kingdom and Europe, but the company also exports to Thailand, Taiwan, Malaysia and United Arab Emirates. In storage and logistics, the company is involved in peas, butter, beef, lamb, fish and vegetables.

On the ingredients side, Scales sends meat byproducts for the petfood trade. Byproducts from the fruit side of the business are used for the juice market.

In May, Scales said its net profit rose by 20 per cent to $20.4 million in calendar 2013. APNZ