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Murray Goulburn to Raise $500m in Farmer Oriented IPO

Murray Goulburn to Raise $500m in Farmer Oriented IPO
Apr 15, 2015 By Simon Herrmann

Philip Tracey, the chairman of Murray Goulburn, has announced the company will hold a vote in May regarding a plan to raise $500m through a unit trust initial public offering.  The deal has been hailed as a “historic moment” by chairman Tracey and will transform the company into a “world-class diary foods business”. The financial restructuring will be dual nature, in the sense that it will offer units with economic rights but no voting power to non-farmers. Murray Goulburn said in its announcement that the new deal was representative of the company’s commitment to returning profits to farmers. "The recommended capital structure will allow MG to seek approximately $500 million of capital to support its growth and value creation strategy to deliver a sustainably higher FMP [farmgate milk price] and future earnings through investment,” said Mr. Tracey.

Murray Goulburn is Australia’s largest farming co-operative and collects and produces more than one-third of Australia’s 9.3bn litres of milk. The company’s decision to maintain high milk prices for payments to farmers has put pressure on competing companies.  Nevertheless, the company has decided to keep high farmgate prices. In the new deal, the IPO shares held by farmers will receive a dividend proportional to the farmgate prices. The higher the farmgate price, the higher percentage dividend the shareholders receive. “As the MD of the company and the board, we will be held accountable by our farmers and investors on the size and quality of our milk pool to allow higher dividend distributions and higher farmgate prices,’’ said chief executive Gary Helou. The announcement predicts shares of Murray Goulburn will be listed on the ASX starting July 10.

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Simon Herrmann Author: Simon Herrmann Apr 15, 2015

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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