Investors likely to see more floats

Listed firms provide the easiest entry into the wine industry for investors but the options are limited.

The NZX has Delegat's, the NZAX has the New Zealand Wine Co, and the Unlisted market has Martinborough Vineyard Estates, Terra Vitae and Waipara Hills Wine Estate.

But after the Delegat's float and as the industry grows, more investment offerings are in the wind.

NZ Winegrowers chief Philip Gregan says there has been a lot of industry interest in the rise in Delegat's share price since its April market debut.

The shares closed yesterday at $2, compared with their $1.40 public offer price.

Gregan says he's been getting strong signals from businesses looking at going public.

His organisation also receives a lot of inquiries from international wine companies about investment prospects in New Zealand.

Delegat's managing director, Jim Delegat, says it could make sense for some smaller businesses to merge and float as a way of raising new capital.

David Belcher, executive chairman of the private equity-style New Zealand Wine Fund, believes there will definitely be more floats as the industry develops and rationalises.

Fund CEO Peter Scutts feels domestic and foreign investors will want greater exposure to the New Zealand wine industry.

James Beale, of brokers ABN Amro Craigs, which helped manage the Delegat's float, says: "Any company coming to market will have to make sure they have the building blocks of supply, brand and distribution in place in order to have success in the public markets."

Unlisted market manager Bruce Cossill says the firms which have gone to Unlisted have mostly done so to improve liquidity for shareholders and to make it easier to raise new money.

Small Waikato winery Mystery Creek Wines - which is considering going to Unlisted - has raised about $3.2 million through share offerings in recent years.

But managing director Garry Major doesn't see a lot of other small companies raising capital this way because many would be concerned about a loss of equity.

But he says he hasn't seen any disadvantage in taking his own holding down to around 30 per cent.