South American dairy farm operator NZ Farming Systems Uruguay listed on the stock exchange yesterday giving early investors the chance to make a quick buck, but not many took it.
NZ Farming Systems was set up by rural services company PGG Wrightson to develop dairy farm operations inUruguay and has bought up 30,980ha of land, holds 20 farms and could expand to 50,000ha at current land prices.
The company completed a $110 million capital raising exercise last week by issuing shares at $1.50 each through a placement to institutions, eligible investors and a rights issue.
NZ Farming Systems chairman Keith Smith said the capital raising showed confidence in the prospects and strategy of the company.
"The total is substantially higher than the minimum $50 million we set out to raise," Smith said.
"As a result, the company has commenced trading on NZX at about number 40 by size just one year after its creation."
The share price of NZ Farming Systems closed yesterday at $1.42 - giving the company a market capitalisation of $336.8 million.
The company had previously raised about $170 million issuing shares at $1 and $1.02 since an initial public offer last December - meaning $100,000 originally invested at $1 a share was now worth $142,000.
In total 1.02 million shares changed hands yesterday - only 0.4 per cent of the issued securities.
The reaction among investors was that they were in for the long-haul, Smith said.
PGG Wrightson holds 11 per cent of the stock in NZ Farming Systems, plus the fund and farm manager contracts for the company.
PGG Wrightson was entitled to a management fee equivalent to 1.5 per cent of the gross asset value each year, reducing to 1 per cent after June 30 next year.
$1.42 Closing price for NZ Farming Systems Uruguay shares after first day.
$336.8m The company's market capitalisation.
