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Tegel shares deliver tasty gain

NZN 2/05/2016 By Jonathan Underhill

Tegel Group Holdings, the poultry group taken public by private equity firm Affinity Equity Partners, rose 9 percent in its NZX debut as investors welcomed a business with market dominance and potential to lift earnings at home and in export markets.

The stock recently traded at $1.71, valuing the company at about $609 million, in the first IPO of 2016.

New Zealand's biggest poultry business is being taken public by its second private equity owner after Affinity Equity Partners acquired Tegel in a leveraged buyout from Pacific Equity Partners and ANZ Capital in early 2011. PEP had, in turn, bought Tegel from HJ Heinz in 2005.

The shares were sold in the IPO at $1.55 apiece, having been marketed in a range of $1.50 to $2.50.

The IPO managers Deutsche Craigs, Goldman Sachs and First NZ Capital had to drum up appetite for Tegel shares in a stock market that Bloomberg News reported this month was Asia's most expensive.

Added to that was the negative factor of Tegel's private equity ownership in a market where the Dick Smith retail chain has suffered a very public demise after being taken public by Anchorage Capital Partners in 2013.

Investors have said export growth is a key to its performance and its ability to develop and expand offshore markets would be watched closely by the market. It will target the Philippines, the Middle East, Japan, Singapore, Korea and Taiwan, adding to existing markets in Australia, the United Arab Emirates, Pacific Island states and Hong Kong, according to its IPO document.

Ogden says Tegel has been well received in Australia, its biggest export market, especially in bidding for contracts in the quick service restaurant (QSR) sector.

It already counts McDonald's, Subway, KFC, Burger Fuel and Hell Pizza as New Zealand customers.

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