Shares for Tegel Group Holdings' initial public offering have been set at $1.55, at the bottom end of its price range, raising an estimated $299 million.
Details on the deal from Tegel were sparse and 87% majority owner, private equity company Affinity Equity Partners made no statement.
The indicative price range in recent weeks was $1.55-$2.50 per share. The two-day book build set the price at $1.55 for each of the 192.4 million shares on offer, raising about $299 million.
Investors have become wary of private equity firms, following the January collapse of Dick Smith Electronics, which was bought in late 2012 by Anchorage Capital for $A115 million and a year later was floated with $A520 million market capitalisation.
Tegel is due to be dual-listed on the ASX and NZX on May 3, the latter being the first NZX initial public offering for 2016.
A spokeswoman for Tegel said the price was set at $1.55. The offer was oversubscribed and there was some scaling back, but she had no details on the oversubscriptions or scaling. Nor could she comment on how much was raised.
Affinity Equity Partners, which was selling down its 87% Tegel stake to 48.7%, was looking to raise $284 million to $320 million, of which $131.9 million was to repay bank debt and $129.6 million to $163 million to pay out holders of Tegel's redeemable shares, BusinessDesk reported.
The remaining $22.5 million to $25.3 million was to cover IPO costs, including an $8 million bonus for senior management.
While the Tegel spokeswoman said there was good support from institutional investors in New Zealand, Australia and elsewhere overseas, sources close to the deal said institutions wanted the price set closer to the bottom of the range, which in turn influenced brokerages.
There was a reported ‘‘good coverage'' across all participating institutional investors for buying into the $1.55 price, but there was no disclosure of a breakdown of the allocations.
For its year's trading to April, Tegel has forecast a $10 million profit on sales of $581.1 million, rising to a $44 million profit on revenue of $637 million the following year.
It intends to pay a dividend of 7c-11c per share, implying a gross dividend yield of 6.2%-7.1%.
Before the book build, brokers were assessing some of the key trading risks for Tegel, including foreign exchange fluctuation, biosecurity risks when exporting and volatility in the price of poultry feed.
Tegel said in its product disclosure statement: ‘‘Tegel's ability to grow export sales volumes with existing customers and win new customers and establish new territories will be key drivers of future revenue growth.''
At least half of the 45% stake Affinity retains will remain tied up in escrow arrangements until it announces its 2017 results. Affinity will be allowed to sell up to 50% of its remaining stake before then, if Tegel's shares spend 10 straight trading days at least 20% higher than the offer price, once the first-half results are posted.
BusinessDesk reported an investor saying there were question marks around Tegel's growth story, which involves a push into new international markets, including South Korea and Japan.
Several recent New Zealand sharemarket floats have performed poorly post-listing and the source said retail investors should ‘‘learn from some of the previous IPOs''.
