Tegel is targeting growth in new markets including the Philippines, Japan, South Korea and the Middle East, as it head for its initial public offering - New Zealand's first of 2016.

The country's largest chicken producer will raise between $299.1 million and $344.4 million, giving the firm a market value of up to $636 million when it lists on the NZX and Australia's ASX on May 3.

A disclosure statement for the offer says final pricing of the shares will be set from an indicative range of $1.55 to $2.50, through an auction-style bookbuild process with institutions and brokers on April 18 and 19. A firm offer to retail clients of selected brokerages will open on April 20 and close on April 29.

More than $130 million of the cash raised will be used to repay bank debt, while up to $163 million will repay shareholder debt. The remaining $22.5 million to $25.3 million will cover IPO costs, including an $8 million bonus for senior management.


Following the IPO, the company's net debt will reduce to $119.5 million.

Tegel said reducing debt levels would allow the company to accelerate domestic and export growth strategies.

The company has been ramping up exports in recent years and has established a presence in the United Arab Emirates, Hong Kong, Australia and the Pacific Islands.

"The key to Tegel's export strategy is identifying attractive new potential markets and strategic partners within those markets to assist Tegel in better understanding the needs of its customers and to expand its presence quickly," the statement says.

Taiwan and Singapore are also named in the document as potential new markets. The firm is aiming to lift exports from 18 to 25 per cent of revenue over the next five years.

Tegel has forecast net profit to rise from $10 million in the year to April 24, 2016, to $44 million in the following 12-month period, thanks largely to decreasing finance costs.

Nick Dravitski, portfolio manager at Auckland's Devon Funds Management, said the indicative pricing appeared to be "possibly more fair" than other offers over the past couple of years.

"It's really hard to pick at the moment where [the final pricing] is going to end up."


The company is dangling a gross dividend yield of 6.2 to 7.1 per cent before prospective investors, which Dravitski said was "above market".

"Tegel appears to be a very well run, highly efficient producer," he said. "The growth aspect depends on its ability to increase its proportion of exports."

Tegel's majority owner, Affinity Equity Partners, will sell about 30 per cent of its existing 87 per cent stake. Affinity won't be able to further reduce its stake until the release of 2017 full-year financial results. However, 50 per cent of Affinity's stake could be released early following the 2017 half-year result if Tegel's share price has gained 20 per cent on its issue price at that time.

The statement flags risks to Tegel's business including rising feed costs and a possible but unlikely lifting of New Zealand's strict restrictions on poultry imports, which could heighten competition in the local market.


• NZ's biggest poultry producer, founded in 1961
• Core operations in Auckland, New Plymouth and Christchurch
• Processes about 50 million chickens annually, about half of the local market