Inghams Enterprises prices IPO at $3.57 to $4.14 a share

Inghams Enterprises poultry meat chickens. (Supplied: Australian Chicken Meat Federation)

Inghams Enterprises has priced its shares at a range between $3.57 and $4.14, according to the company’s prospectus which was lodged today ahead of a float on the Australian Securities Exchange in November.

TPG Capital will list Inghams Enterprises as a group valued at between $1.33 billion and $1.53bn, with the enterprise value of the poultry producer valued at between $1.7bn and $1.9bn.

TPG Capital, will raise between $767 million and $1.12 billion.

The group’s enterprise value will sit between 5 per cent and 4.4 per cent.

The poultry producer is selling up to 70 per cent of its holding in the business but no less than 50 per cent.

The pricing range equates to between 13.5 times and 15.5 times the company’s forecasted earnings.

Net profit for Inghams is expected to grow 19 per cent for the 2017 financial year, with volume growth of 7.7 per cent over the same period.

The fruit and vegetable company Costa listed last year at a value that equated to 18 times its forecasted earnings, and the latest pricing range for Inghams places it on a similar footing to its smaller rival across the Tasman, Tegel Foods.

The pricing is also below the average for listed Australian top 200 companies at 16 times their forecasted earnings, which average annual earnings of about 7.7 per cent.

Tegel, which listed earlier this year, and Costa, have both been used as comparables for the Inghams float.

However, some argue that Tegel is not a relevant comparable, given that it is one quarter of the size of Inghams and that the New Zealand market is growing at a slower clip.

The Ingham float is slated to occur just days ahead of the $3.3bn-plus Alinta Energy, of which TPG holds a stake of between 20 and 30 per cent.

Today’s DataRoom column noted that market analysts have been predicting that TPG would conservatively price Inghams in order to achieve a strong result so investors will also back the planned Alinta offer, considered by some as a more challenging proposition to sell to investors.

TPG Capital bought Australia’s largest poultry producer from the Inghams family in 2014 for close to $900m and sold the its properties soon after for about $600m.

According to forecasts, the operating business will generate a 13.5 per cent lift in its earnings before interest, tax, depreciation and amortisation to $190.1m for the 2017 financial year.

Annual net profit is expected to grow by 18.9 per cent from fiscal 2016 to $98.8m.