Synlait shares soar on debut

Investors in the company paid $2.20 a piece for their shares and at the listing the first recorded price was $2.62 - a 19% premium to the offer price.

Shortly after listing the shares climbed higher to trade above 2.70 as investors sought more stock.

The company had earlier raised $75 million in new equity to help fund its growth of infant formula and nutritional dairy products, which it processes and exports overseas.

Founding shareholders, including managing director John Penno, took the opportunity to sell down a proportion of their shares through a secondary offer worth $38.7 million.

Chinese firm Bright Dairy sees its stake in Synlait reduced from 50.1% to about 39%, while FrieslandCampina, one of the largest dairy co-operatives in the world, will hold about 7.5% of Synlait shares after buying into the IPO.

The offer, which was heavily oversubscribed, was jointly lead managed by First NZ Capital Securities and Goldman Sachs New Zealand.

Synlait Milk chairman Graeme Milne says the IPO has been an outstanding success.

“Synlait Milk has raised $75 million of new capital which will be applied to pay down debt and access funding for growth initiatives that will increase the capacity of the existing plant by 50% and lift production of high-value ingredients and infant formula.”

“Of further significance is the addition of 2296 new shareholders to support Synlait Milk’s growth. This includes FrieslandCampina Investments Holding BV, which is a subsidiary of Royal FrieslandCampina of Holland, one of the world’s largest dairy co-operatives and an existing customer of Synlait Milk.

"In addition, the IPO attracted strong support from institutions in New Zealand, Australia, Singapore and Hong Kong, employees and suppliers of Synlait Milk and New Zealand retail investors.”

Synlait's 2014 revenue is forecast to jump 23% to $524 million, according to the prospectus.

The IPO comes as Chinese dairy heavyweights Inner Mongolia Yili Industrial Group and Yashili International Holdings plan to build their own milk formula processing plants in New Zealand.

China Mengniu Dairy Co recently signed a takeover deal to buy Yashili.

Synlait's growth initiatives include building a new milk powder dryer and a blending and packaging plant at its headquarters outside Christchurch, while it also plans to enlarge its storage facilities. 

“Synlait Milk has performed. It has met its milestones and we are fully confident that as a trusted supplier of ingredients to some of the world’s leading milk-based health and nutritional brands Synlait Milk is on track to deliver value for all stakeholders now and into the future.

“Following our successful IPO we will now undertake a series of growth initiatives that will take Synlait Milk on the next stage of its journey. We will seek to fulfil our potential by continuing to focus on the requirements of our customers and delivering excellence at every step in the process.”