The final pricing of New Zealand's first initial public offering this year, chicken producer Tegel, is expected to be revealed today ahead of the company's transtasman sharemarket listing on May 3.
An indicative range for the shares of $1.55 to $2.50 was released on April 1, giving the Auckland-based company - majority owned by Asian private equity firm Affinity Equity Partners - a market value of up to $636 million.
The final pricing will be set through an auction-style bookbuild process with brokers and fund managers which kicked off yesterday and was scheduled to wrap up at 1pm this afternoon.
A Tegel spokeswoman said the offer had garnered strong interest from institutional investors in Australasia, Hong Kong and London.
Over $200 million of binding demand had been received from retail brokers and - with early institutional bids - the bookbuild was expected to be covered at launch, she said.
The spokeswoman said the offer's joint lead managers were pleased with the strong retail demand seen on both sides of the Tasman.
"Key elements that have resonated [include] the strength of the business positioning, high dividend yield, quality of management and familiarity of the brand."
Retail investors are, however, expected to face heavy scale-backs in their share applications.
Meanwhile, local market sources still had concerns about Tegel's outlook yesterday.
"There is good interest at the low end of the [price] range," said one investor, who requested anonymity. "People are really struggling with the higher end."
He said there were question marks around Tegel's growth story, which involves a push into new international markets, including South Korea and Japan.
A number of recent New Zealand sharemarket floats have performed poorly post-listing and the source said retail investors should "learn from some of the previous IPOs".
Listings backed by private equity investors have also been attracting scepticism following this year's collapse of electronics retailer Dick Smith, which listed on the ASX in 2013.
"There is certainly still a significant lingering distrust in markets of private equity and private equity sell-downs," said another market source, who also didn't want to be named.
He added, however, that "sufficient demand" existed for Tegel to get its deal over the line.
The offer will raise between $299.1 million and $344.4 million.
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.
Affinity Equity Partners will sell around 30 per cent of its existing 87 per cent stake in Tegel through the deal.
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.
The deal is being managed by Deutsche Bank/Deutsche Craigs, Goldman Sachs and First NZ Capital.
• NZ's biggest poultry producer, founded in 1961, with more than 2000 staff.
• Core operations in Auckland, New Plymouth and Christchurch.
• Processes about 50 million chickens annually, about half of the local market.
• Export markets include the United Arab Emirates, Hong Kong, Australia and the Pacific Islands.