Salmon set to make share market return

NZ King Salmon confirms IPO, listing plans.

Salmon farming, a feature of the share market in the heady days of the 1980s, looks set to make a comeback after New Zealand King Salmon announced plans yesterday to raise up to $200 million through an initial public offer and listing on the NZX and ASX by late October.

Proceeds of the offer will be used to repay debt, fund future investment and working capital, and to enable its second biggest investor, Auckland-based private equity company Direct Capital, and some other shareholders to exit all or part of their holding.

The company is controlled by Oregon Group, the investment firm of Malaysia's Tiong family headed by Tan Sri Sir Tiong Hiew King, with 51 per cent. Direct Capital has about 45 per cent.

NZ King Salmon confirmed in July that it was looking at its capital structure.

King salmon - the species - forms a small fraction of the world's farmed salmon market, which is dominated by Atlantic salmon.

"New Zealand King Salmon is the world's largest aquaculture producer of the premium King salmon species and the company controls all elements of the value chain from breeding and growing to harvesting and processing, and has been growing and selling salmon to consumers and chefs for more than 30 years," the company said.

Oregon Group is expected to retain a significant stake in the company following the offer.

NZ King Salmon chairman John Ryder said the company had a well-established domestic market presence and share, and a history of successfully selling products to North America, Australia, Japan and other parts of Asia, Europe and other countries.

New Zealand salmon farming took off in the 1970s and early'80s. Regal Salmon and Southern Ocean came together in 1996 to form NZ King Salmon.

"What has changed since then is that we are increasingly moving towards a premium-branded food delicacy here and around the world," chief executive Grant Rosewarne told the Herald.

Rosewarne said the IPO was designed to serve two purposes: Raise fresh capital and allow Direct Capital to exit all or part of its holding.

"They have determined that an IPO is a way for them to realise their investment and to support the company going forward," Rosewarne said.

NZ King Salmon owns and operates eight sea farms in the Marlborough Sounds, including three new farms consented in 2014 with a 35-year term.