Shares in Tegel, New Zealand's biggest poultry producer, are widely expected to trade at a premium to the offer price after the company lists on the NZX and Australia's ASX tomorrow.

The Auckland-based company's initial public offering, the first on this side of the Tasman in 2016, was given a final price of $1.55 a share through a bookbuild with fund managers and brokers last month.

That was the bottom of an indicative range up to $2.50.

The offer was heavily oversubscribed amid strong interest in New Zealand, Australia and further afield, with priority given to "high quality" investors, a Tegel spokeswoman said last month.


Grant Williamson, of sharebrokers Hamilton Hindin Greene, said the shares could trade at a "slight premium" following the listing, as there was likely to be demand from investors who had missed out on getting a slice of the offer.

"I think there will be a little bit of retail demand on the market when the stock lists, provided it's not too far above the $1.55 mark," he said.

Matt Goodson, managing director of Salt Funds Management, which has taken a stake in Tegel, expects the company to list "solidly".

"In our view [Tegel] was priced fairly and fully on the current business as we know it ... there is reasonable potential for upside if they can grow their export business, which will however also require significant investment," Goodson said.

Tegel is targeting expansion into new export markets including South Korea and Japan.

Williamson said if there are weak offshore markets "then local retail investors may be a little bit hesitant to do much buying."

Meanwhile, Williamson said investors remained wary of private equity-backed deals after this year's collapse of electronics retail chain Dick Smith, which was floated on the ASX by Australia's Anchorage Capital in 2013.

Tegel's majority owner, Asian private equity firm Affinity Equity Partners, has reduced its stake in Tegel from 87 per cent to about 45 per cent through the IPO.

"[Tegel] has got to gain market confidence and that can only be done through them achieving their forecasts and their targets," Williamson said.

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 raised gross proceeds of about $300 million - which will largely go towards paying down debt - and gave the company an implied market value of roughly $550 million.


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.