AU: Costa family considers IPO
Costa appointed Goldman Sachs and UBS in the second half of last year to sound out the market for potential options, including a trade sale or IPO according to the newspaper The Australian.
The advisers were drafted in by the company after the founding Costa family at the time widely signalled its intentions to exit the business.
The banks have this week launched a non-deal road show for a potential float of Costa before June, in an exercise that will test investor appetite and provide education about the business surrounding factors such as seasonality and its relationship with its customers, supermarket giants Woolworths and Coles.
Founded by the Sicilian immigrant family of chairman Frank Costa, The Costa Group is Australia’s largest private producer, marketer and exporter of fresh fruit and vegetables and grows mushrooms, tomatoes, berries, bananas, citrus, grapes and avocados.
US private equity group Paine & Partners purchased half of the business in 2011 in an agreement that hinged on founder Frank Costa, the former Geelong AFL club president, to remain as chairman for five years.
Costa’s exposure to competition between Woolworths and Coles had some questioning whether the business would be suited to the listed market, given the adversity by investors to companies subjected to seasonality.
However, a significant proportion of the business is ‘protected cropping’ where the fruit and vegetables are grown in environments that are not exposed to weather.
The company is also said to have a strong negotiating position with the supermarkets.
Previous estimates of the company’s value are around the vicinity of $1bn, although sources have suggested it would now be far less.
Its annual revenue is said to be around $1bn and a logical trade buyer would be group out of the United States or South America, one source said.
Source: The Australian