Fears mature Inghams won’t fly high after listing

Inghams Enterprises faces the prospect of being repriced, according to fund managers in the market, on the back of fears that the poultry producer will trade poorly once listed.

It is understood that technically, the book is covered, largely with retail investors and those from offshore.

But local institutions are thought to be shunning the initial public offering, which has shares for sale between $3.57 and $4.14, equating to a market value of between $1.3 billion and $1.5bn, or 13.5 and 15.5 times its forecast earnings.

However, Australian Super is investing at least $100 million in the deal for a 0.75 per cent fee, but is already an investor in one of TPG Capital’s funds, although not the Asian fund that owns Inghams.

Almost a fortnight ago, Inghams was slated to price in the mid to lower end of its range.

One of the problems has been that retail brokers ordered more stock than they planned to take, sources say, in the anticipation that their allocations would be scaled back in a major way.

Australian fund managers also see Ingham’s as a mature business, without strong growth prospects and that earnings uplift will be expected through cost cuts. But those close to Ingham’s maintain the deal is well supported at the existing price range ahead of the bookbuild tomorrow.

It comes as energy company Alinta, of which TPG Capital also owns about a third, is due to lodge its prospectus next week.

Some believe the vendors needed to sell the business at a lower earnings multiple than the well regarded AGL Energy to muster support for a raise as high as $2bn. Part of the challenge is that hedge funds are also losing their appetite for IPOs after chalking up losses on recent floats in the US.

Additional reporting: Jake Mitchell