What a boiler – Inghams Enterprises might list

Inghams Enterprises is considering a float, according to a report in The Australian Financial Review today. The company, which had estimated revenue of more than $2 billion in 2012, has been up for sale since last year following the death of Jack Ingham, who co-founded the company with his brother, Bob.

The company has not confirmed the decision: “Inghams has not made a decision in relation to an IPO and is still in discussions regarding the sale process”, John Hexton, Director of Group Services at Inghams said in a statement.

If it does list, the move will take advantage of the rising sharemarket – which yesterday broke through the psychological barrier of 5,000 points – after Bob Ingham and CEO Kevin McBain failed to agree on a price with private buyers, which reportedly include a private equity group, Blackstone, and a Chinese agribusiness, New Hope. The price tag is in excess of $1 billion according, to AFR.

Ernst & Young partner, Graeme Browning, says: “What I think is interesting is that people are suggesting that an IPO is an available option and that is a change. There has been a bit of talk about the IPO ‘window’, and this is further evidence of changing sentitment.”

For business sellers, the option of a listing helps negotiate a better price. “It maximise the competitive tension and should result in a best deal,” Browning says.

Browning says companies like Inghams would be the best candidates for listing early in the IPO window. “What the market will want to see, when the IPO market starts to open, is for the first few companies to be larger, well-known and established businesses with predictable earnings and lower risk. If they list and trade well and if investors do well, that will enourage investor to support future less well-known companies that list.”

 

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