The Australian Dairy Farms Group — likely to list under the ASX reserved code of AHF — already owns two large dairy farms at Brucknell, near Warrnambool in Victoria’s southwest, and is looking to buy 14 more over the next two years if its $14.5m capital raising offer is successful.
Group chairman Michael Hackett said the fledgling company had been overwhelmed by interest and investment from international and Australian pension funds, private investors and institutions looking to buy a stake in Australia’s booming dairy future.
Australian Dairy Farms has received commitments of $8.5m from institutional investors in Hong Kong, Malaysia, New Zealand and Australia, well above the $5m it had initially hoped to raise.
“It is clear that institutional investors share our view that there is a significant opportunity to consolidate Australia’s fragmented dairy sector,” Mr Hackett said. “The capital raising will provide a strong platform to deliver our vision to use scale via the acquisition of additional quality farms to deliver revenue and cost synergies to produce 50 million litres of milk a year within two years of listing.”
The public bookbuild undertaken by Bell Potter Securities, which will open to investors on August 26 after a prospectus is published next week, is offering 72.5 million shares in the Australian Dairy Farms Group at 20c each.
Together with shares held by directors and other exiting entities, a fully subscribed capital raising would see the company debut on the ASX with 85.5 million shares and a capital value of $17.1m. The company also announced a sweetener to new investors buying shares ahead of listing, confirming it would offer a one-for-two bonus share option within four weeks of the company float to every eligible shareholder.
The loyalty offer entitles shareholders to convert each option to a full-paid share within the next six months at a price of 25c, potentially raising a further $9m in capital.
Founder and director Adrian Rowley said the focus of the Australian Dairy Farms group was clear: to buy and develop large corporate dairy farms with herds of between 500 and 1000 cows each, focusing on the premier “golden triangle” milk production region of western Victoria between Warrnambool, Camperdown and Timboon.
Mr Rowley thinks there is a strong case for longer-term growth in the dairy industry and good returns from investing in dairy farms, with larger farm aggregates able to build efficiencies of scale that cannot be reaped by family farms.
Mr Rowley wants ADFG to become the largest producer of milk in Australia, delivering the company market power and influence with processors.
Source: The Australian
