Frucor float squeezed by $37 million

By DITA DE BONI

The owners of Frucor Beverages have taken a $37 million trim completing a sharemarket listing of the drinks company.

Financial sponsor Pacific Equity Partners (PEP) - which prompted the float by selling 50.1 per cent of its shareholding to provide liquidity to investors - had estimated shares in the company at between NZ195c-225c (A162c-187c), but will net much less from the process after shares were issued at 150c (A120c) yesterday.

Frucor shares begin trading today.

The company's market capitalisation now sits at $187.5 million, after being first calculated in the prospectus at $262 million using the mid-point of the original indicative price range.

Presumably PEP will be looking for better value when, as foreshadowed, it sells the remainder of its shareholding in Frucor at an unspecified future date.

At the opening bell, new shareholders will own 50.1 per cent of the company, as originally intended. Retail investors will hold 33 per cent, and due to an over-subscription, domestic and international institutions have been scaled back to 67 per cent.

Oversubscription is commonly claimed after an institutional "book buy" of new shares, but Frucor was trumpeting nothing but a successful initial public offering yesterday.

Frucor Beverages chairman Simon Pillar said strong support shown by retail and institutional investors was an endorsement of the company, its brands and future strategy.

"The final price of $1.50, while below indicative range, is an outstanding result in very tough market conditions."

Mr Pillar said demand demonstrated coverage at higher pricing levels, but vendors reduced the price offering to achieve a strong secondary market, a move brokers and analysts described as "very smart."

Rowan Johnston, of Frater Williams and Company, says Frucor will engender a "positive vibe" in the market by giving retail investors reasonably priced access to ownership of the company.

"It was a good float with a good reception. Brokers should be applauded for their conservatism and investors should be happy. There is a good chance the shares will come on at a reasonable premium."

Frucor has the lion's share of energy drinks in Australasia with product portfolio star V.

The company also produces fruit juice brands including Fresh Up, Just Juice and McCoys in New Zealand, and owns the Pepsi bottling contract.

Overall, it produces about 60 million litres of cold beverage each year.

Frucor ordinary shares start trading this morning at 10.30 local time in both Wellington and Sydney.