My Food Bag plans to sell up to 185 million shares in an initial public offer that values the meal kit company at just under $450 million.
The company has filed its product disclosure statement and says it aims to list on the NZX and ASX on March 5.
The shares will be priced at $1.85 each, implying a post initial public offering market capitalisation of $449m.
Up to $342m will be raised under the IPO. The offer includes 155.3m existing shares (64.1 per cent of the company) and 29.6m new shares.
Money raised will be used to repay bank debt and pay transaction costs. Existing shareholders, including funds controlled by private equity firm Waterman Capital, will retain at least 23.7 per cent ownership of My Food Bag after the offer.
Companies Office records show the Waterman Fund 3LP owns 70 per cent of the company having invested in October 2016.
Co-founders Cecilia Robinson and her husband James own 10.8 per cent, as does Theresa Gattung. Interests associated with Nadia Lim own 5.4 per cent.
My Food Bag says more than 10,000 customers and team members have registered to receive a priority allocation in the IPO. Australian investors were also targeted.
Fund managers Milford Funds, Harbour Asset Management and Investment Services Group have committed to bid for holdings of at least 5 per cent of the company.
My Food Bag chairman Tony Carter said new funds raised would provide the business with flexibility to pursue its growth strategy.
"Our growth will be underpinned by continued leadership in the meal kit market and expanding our food-based offerings to align to consumer trends," Carter said.
In the past financial year, My Food Bag made a profit of $8.2m and revenue of $153.3m.
In the 2021 financial year ending March 31, it expects to have turned over $189.5m and receive a net profit of $800,000. Its profit forecast for FY22 is $20.1m.
The offer price implies an earnings ratio of 22.4 times its forecast 2022 financial year earnings and a gross dividend yield of 5 per cent.
Henry Chung, director of investment banking and head of equity capital markets at Jarden - the arranger and joint lead manager of the offer, said: "My Food Bag, the first IPO of 2021, is already under way in the year's first quarter. It's our view this is a clear sign of general confidence, and what is set to be one of the busiest years on the market in some time."
Board member Chris Marshall, founder of Waterman Capital, said the investment company was pleased to be involved in the next chapter of the company.
"When we invested in 2016, we saw a successful business that was well positioned to continue to grow its core offering and had the potential to leverage its platform to expand more broadly within the food and grocery sector.
"The business is extremely innovative and customer centric, which is an exciting combination. In addition, the online food delivery sector is the beneficiary of some very favourable long-term macro trends."
In its product disclosure statement, My Food Bag cites German-based global meal kit delivery company HelloFresh and local player Woop as its biggest competition.
It said it expected more competition to enter the market, and that it may have to discount its products or invest in product development and marketing to retain or win market share.
My Food Bag says it has delivered over 85 million meals to more than 300,000 households since it started in 2013.
Ed Glennie, investment strategist at Hobson Wealth, said the offer price seemed reasonable relative to some of its listed peers such as Marley Spoon in Australia, and Hello Fresh.
Glennie said Marley Spoon was not yet profitable whereas My Food Bag was, which that alone meant it could be priced off of an earnings basis.
My Food Bag's dividend yield would be attractive with retail investors, and it would likely be the only listed meal kit company that pays a dividend, he said.
"That signifies that there is perhaps less growth [compared to] if they were reinvesting to grow the business, [but] that will probably appeal to a broader category of investors.
"It reminds me a little bit of when Trade Me listed and people were skeptical of the growth prospects but the dividend was attractive, they were able to add different markets and divisions and ultimately shareholders were rewarded when private equity ended up bidding for it a number of years after listing. In this case, private equity is selling but they are selling because it is at the later end of their fund life," Glennie told the Herald.
He said it was encouraging that My Food Bag had already got three institutions that were prepared to commit to its $1.85 per share offer price.
"It's attractive for the NZX to be getting a new listing in a very recognisable brand name."
Key numbers and dates
• Up to 185 million shares on offer to public
• My Food Bag valued at $449 million post IPO
• Up to $342m will be raised under IPO
• Offer expected to open on February 19
• My Food Bag plans to list on NZX and ASX on March 5