PETALING JAYA: Dairy producer Farm Fresh Bhd, enroute to a listing on the Main Market of Bursa Malaysia Securities Bhd, plans to raise RM1 billion in its initial public offering (IPO).
This IPO is Malaysia’s largest IPO since June 2021.
Farm Fresh’s IPO involves an offer for sale of up to 520.2 million existing shares and a public issue of 223 million new shares based on the initial retail price of RM1.35 per share. Proceeds to the company of RM301 million raised via the public issue, will be utilised to establish a new manufacturing hub, dairy farm and integrated processing facility in Malaysia, expansion of a production facility in Australia, regional expansion outside Malaysia and for working capital together with listing expenses.
The IPO has secured support from a record number of 30 cornerstone investors, the most seen in a Malaysian IPO to date. The 30 renowned cornerstone investors are Abrdn, Affin Hwang Asset Management, AIA, Alcea Rosea (Creador), Barings Singapore, Eastsprings Investments, Employees Provident Fund, Fortress Capital Asset Management, Franklin Templeton Asset Management (Malaysia), Great Eastern Life Assurance (Malaysia), Hong Leong Asset Management, Hong Leong Assurance, JPMorgan Asset Management (Singapore), KAF Investment Funds, Kenanga Investors, Kumpulan Wang Persaraan (Diperbadankan), Lembaga Tabung Haji, Manulife Investment Management, Maybank Asset Management, Merit Glory (Ikhlas Capital), New Silk Road Investment, OAKS Emerging Umbrella Fund, Permodalan Nasional Berhad, Principal Asset Management, Social Security Organisation, UBS Asset Management (Singapore), UOB Asset Management (Malaysia), Urusharta Jamaah, Value Partners Hong Kong, and Zurich Life Insurance Malaysia. The cornerstone investors will take up in aggregate 80% of the institutional offering tranche under the IPO.
Farm Fresh, in operations since 2009, has a strong track record of rapidly growing its dairy market share and product offerings with plans to further expand its capabilities across the value chain distribution network while increasing its regional presence outside Malaysia. The group has demonstrated strong financial performance over the years. From financial year ended March 31, 2019 (FY19) to FY21, the group’s compound annual growth rate (CAGR) for revenue was 65.9% from RM178.2 million to RM490.5 million and its profit after tax attributable to owners of the company increased at a CAGR of 14.9% from RM27.4 million to RM36.2 million.
According to Frost & Sullivan, Farm Fresh is the second-largest player in the ready to drink (RTD) milk category (which includes the chilled RTD milk and ambient RTD milk segments) for the first nine months of 2021, commanding a 18% share of the market. In the chilled RTD milk segment, Farm Fresh is the market leader, with its market share at 42% for the nine months ended Sept 30, 2021. The group is also the third largest player in the yoghurt category with an 11% share of the Malaysian market.
Farm Fresh group managing director and group CEO Loi Tuan Ee said the growth of the group reflects the benefits of being a vertically integrated producer of dairy products.
“Our “grass-to-glass” model and presence across the entire spectrum of the dairy industry provides us with various strategic and financial advantages that differentiates us from our competitors. Our home dealer network, which is the largest in the country amongst vertically integrated dairy companies, extends our reach and enables us to achieve greater penetration of our products. It has also helped us contribute to communities, by spawning a network of rural and sub-urban micro-entrepreneurs who distribute our products.
“We are well positioned to capitalise on the sustained strong consumer demand for fresh milk products in addition to addressing the insufficient local milk production visible today. Post-listing, Farm Fresh will endeavour to execute our plans to continue gaining market share and growing our sales in Malaysia and abroad. By optimising our growth, we endeavour to reward our shareholders through the adopted dividend policy that targets to return 25% of our annual earnings to shareholders,” said Loi.
For Farm Fresh’s listing exercise, CIMB Investment Bank Bhd is the sole principal adviser, joint global coordinator, joint bookrunner, joint managing underwriter and joint underwriter for the IPO. Maybank Investment Bank Bhd is the joint global coordinator, joint bookrunner, joint managing underwriter and joint underwriter. Credit Suisse Securities (Malaysia) Sdn Bhd and Credit Suisse (Singapore) Limited are also participating as the joint global coordinators and joint bookrunners for the listing of Farm Fresh. Affin Hwang Investment Bank Bhd, AmInvestment Bank Bhd, Hong Leong Investment Bank Bhd and RHB Investment Bank Bhd are the joint underwriters for the IPO.
Pursuant to the launch of the prospectus, applications for the public issue portion are open from today and will close at 5pm on March 8. The group is scheduled to be listed on the Main Market of Bursa Securities on March 22. Upon listing, Farm Fresh will have a market capitalisation of RM2.5 billion based on the initial retail price of RM1.35 and its enlarged share capital of 1.86 billion shares.
