Costa slips below IPO price after $401m Australia offering

The company sold approximately 244.7 million shares at A$2.25 apiece, towards the bottom of the A$2.20-2.70 indicative range, according to a regulatory filing. As of mid-afternoon trading on July 27, the stock was at A$2.17.

US-based Paine & Partners, which focuses on the global food and agribusiness industry, purchased a 50% interest in Costa in July 2011 through its $1.2 billion third fund. The Costa family held on to the remaining equity in the company. The GP said at the time that the investment would strengthen Costa's balance sheet and give it access to additional capital to finance future growth and R&D opportunities.

In 2013, Costa completed the bolt-on acquisition of Adelaide Mushrooms, which claims to be South Australia's number one mushroom producer.

Of the shares sold in the offering, 167.7 million were held by Paine & Partners and the Costa family. The private equity firm held 54.2% of the business as of the date of the prospectus and has seen its holding reduced to 12.4%. It has taken A$204.5 million off the table and the current market value of its remaining interest is around A$84 million.

The Costa family generated A$173 million through the offering and has seen its stake fall from 45.8% to 10.5%.

Costa was founded 120 years ago as a food and fruit shop in Geelong, Victoria. It is now Australia's leading producer of blueberries and raspberries, mushrooms, glasshouse-grown tomatoes, and citrus. The company's operations include approximately 3,000 planted hectares of farmland, 20 hectares of glasshouse facilities, and seven mushroom growing facilities. It also has packing and marketing functions.

Australia's fresh fruit and vegetable industry is estimated to have generated A$7.8 billion in revenue for the 2014 financial year, and the categories in which Costa operates are thought to be worth A$3 billion.

The company reported pro forma revenue of A$662.3 million in 2014, up from A$573.3 million the previous year. EBITDA rose from A$52.3 million to A$75.2 million. Projected revenue for 2015 is A$704.4 million, with EBITDA and net profit at A$71.7 million and A$37.8 million, respectively.

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• Topics
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• Paine & Partners
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