UK equity firm, Mondrian, has taken a $60m stake in the Costa Group, after its first day of trading on the ASX raised $551 million. The money will go towards seven berry growth projects, as well as tomato expansion in Guyra, Northern New South Wales. News of the IPO was accompanied by comment that other horticulture companies will soon also float on the ASX.
Owners Paine & Partners and CEO Frank Costa have each taken up shares as well, as CEO Harry Debney revealed he planned to double the size of the business over four years. The Australian reported that Mondrian usually invests in companies with a prospect for income growth and high future dividend payouts.
The berry expansion is being developed on a 52-week per year cycle, and will all be grown in hydroponics, under protective tunnels. "In Far North Queensland we're now harvesting in a new operation up there,” he said. "In China, we're planting raspberries and blueberries next month, over 68 hectares in hydroponics under permanent tunnels.”
An additional 90 hectares, to be planted alongside 182 already in Morocco will service Europe, and will contribute to 25% earnings from overseas markets.
The Costa Group currently exports around 12% of its produce, but it produces 42% of mushrooms consumed within Australia, and is a market leader in citrus. 55% of the citrus it produces goes overseas to Japan and the US and China. Costa also delivers a 3 million tray crop of bananas for the domestic market.
Owner Frank Costa, who began the business as a small fruit and vegetable seller, was ‘delighted’ with the results of the IPO, according to Mr Debney’s statements in the ABC report.