THE year is ending with a burst of share market activity around newly listed agribusiness stocks as big name livestock export company Wellard heads a trio of initial private offerings (IPO).
Burgeoning export opportunities for food products, particularly to China, have fuelled the listings surge and stimulated recent share price momentum for many farm service agribusinesses already trading on the stock market.
Wellard, Australia's biggest live cattle and sheep export business expects to be on the Australian Securities Exchange (ASX) before Christmas following a $300 million capital raising, as does newly launched veterinary services group Apiam Animal Health, whose $40m share offer opens on December 1.
One of northern China's largest milk producers, China Dairy Corporation (CDC), is also poised to float about 13 per cent of its business to raise about $20m on the ASX in January.
CDC owns more than 40,000 dairy cows in China and sells raw milk to dairy processors, but also wants to partner with an Australian processor, tapping into local dairy production and processing technology to grow its business model.
The latest listing rush follows the August float of Adelaide-based Beston Global Food Company which owns South Australian dairy farms and processing operations, plus interests in food ingredients, seafood, dairy and red meat supply chain businesses.
Farmer-owned Murray Goulburn co-operative floated a capital trust in July and farmer shareholders in the big SunRice food processing and marketing business are to vote on a plan to gain similar ASX exposure in March.
Agribusiness analyst with stock broker Morgans, Belinda Moore, said interest in agriculture as an investment diversification option had blossomed in the past 18 months, led in part by strong global beef market fundamentals and dramatic gains in red meat values in Australia.
Australian agriculture's disease-free status, plus the combined beneficial impacts of the low dollar, low oil prices, new trade agreements and emerging Asia's hunger for protein were seen as a "huge opportunity" for investment growth in the sector.
"The ag sector is generally trading very strongly - it has outperformed the ASX 200 in the order of 49pc in the past two years," Ms Morgan said.
Enthusiasm for agricultural stocks had been buoyed by solid profit results and big share price gains from businesses as diverse as farm services company Elders, to dairy formula maker Bellamy's Organic, honey business Capilano and chemical maker Nufarm.
In Western Australia Wellard, previously part of the Italian-based Balzarini family business which is being restructured, is offering retail and institutional investors 215m shares at $1.39 each.
The capital raising will give new investors 54pc of its issued capital, while Perth-based chief executive officer Mauro Balzarini retains 36.6pc of Wellard, plus support from several cornerstone investors with about 5pc.
Members of his management team will own 3.4pc.
Wellard includes the Wellard Rural Exports shipping business, shipping about a million sheep and cattle overseas annually, plus operations in South America, two feedlots and an abattoir at Kojonup, south east of Perth.
It expects to commence ASX trading on the ASX on December 17 with a market capitalisation of $556m.
Mr Balzarini, whose other Australian interests include about 160,000 hectares of farming country, said the broader family business structure was not suitable going forward so floating Wellard as an independent venture would provide the financial flexibility for growth and to repay external debt.
Growth initiatives include building pre-export quarantine facilities in Darwin and Townsville and a cattle supply joint venture business in China with the Fulida Group.
He said Wellard needed to capitalise on rising global red meat demand which was particularly evident in South East Asia.
"We want to take advantage of the work we've done and not miss the boat, because the opportunities are very big," he said.
"To meet that demand Wellard wants to expand its land and maritime logistics capacity, partner with customers in Asia in downstream facilities and continue developing our global supply of livestock.
Head of veterinary business Apiam, Chris Richards, has similar motives behind the expansion and listing of his Bendigo, Victoria, based national network of veterinary clinics now servicing pig, beef and dairy farmers.
He pointed to strengthening demand in the wake of recent free trade deals with China, Japan and South Korea as underpinning farm production growth, and Apiam's business.
Apiam plans to employ at least 100 veterinarians in 25 locations, providing vet services to about 35pc of the pig industry, 50pc of the beef feedlot sector and 25pc of Australia's dairy cattle.
It is also expanding into wholesaling veterinary products.
Funds raised via the offer will help it acquire 12 additional veterinary businesses, including remaining interests in five currently part-owned by the company.
