Scales Corp confirms listing plans

ALAN WOOD
Last updated 14:19 03/06/2014

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Plans by apple exporter Scales Corporation for an initial public share offer (IPO) and NZX listing come amidst a flurry of IPO activity.

As Scales confirmed plans to list, market sources today said other companies were looking to list this year.

Scales Corp has appointed First NZ Capital and Deutsche Craigs as advisers, and a prospectus is due to be issued in the middle of the month.

Scales is 84 per cent owned by private equity investor Direct Capital through its Direct Capital IV and Pohutukawa II funds, along with co-investment partners New Zealand Superannuation Fund and ACC, with the balance held by senior management team members and some 400 external investors.

The IPO will involve the sale of new shares and some of the shares held by existing shareholders, with Direct Capital saying it aimed to keep an as-yet undisclosed cornerstone stake.

One market participant, who did not want to be named, said there were a number of companies doing "the rounds" of the financial community to drum up support for potential listings at a time when the share market was on the rise.

"Unless the market falls away dramatically, and we're not really expecting that, we think [that in] the second half of the year, which is normally the busiest part, there will be a lot of IPOs," the participant said.

The commentator pointed to other apple related companies that had been listed but then delisted from the NZX including Apple Fields and Hawkes Bay-based Eastern Equities.

Grant Williamson, a director of brokers Hamilton Hindin Greene, said Scales had put in some good performances in the last couple of years due to strong apple prices and good growing seasons. However, there were some risks around an apple-based company in terms of harvests that might not be so profitable.

"Obviously when you are dealing with these sorts of companies you are going to have bad growing seasons and prices will be volatile," he said.

"You have to have a close look at all that, and also the price the shares are going to come to the market at.

"But obviously it would be a welcome addition to the local board."

In May Scales reported good market conditions contributed to a record profit of $20.4 million for the year to December 31, up 50 per cent from $13.6m in 2012. Revenue rose 17 per cent to $278m.

Forecasts for the company's 2014 year are likely to be contained in the IPO prospectus to be issued later this month.

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