Lynch Group cultivates board before putting IPO plans in motion

The roadshow for Lynch Group’s’ float will begin in March before the listing in April.

Lynch Group has appointed its board ahead of its plans to float on the Australian Securities Exchange, with plans for the listing expected to start in earnest next month.

Lynch is run by managing director Hugh Toll, who will naturally be on the board, while the chairman will be Patrick Elliott, the co-founder and partner of Lynch’s private equity owner, Next Capital.

Other directors will be former Norton Rose Fulbright lawyer Liz Hallett and former Westpac executive Peter Clare.

Also on the board will be Shanghai-based Peter Arkell.

The roadshow for the float will begin in March before the listing in April and working on the IPO is JPMorgan, Citi and Jarden along with Stanton Road Partners.

Lynch counts Coles and Woolworths as its major customers, and while such groups are known for placing pressure on margins, they provide earning stability, with the supplier and customer both seen as co-dependent.

However, the business also has a strong domestic division in China, where it sells to wholesalers and retailers, and where the market is expected to double in size.

Lynch established itself there in 2002, with four large farms, two of which are focused on supplying the Australian market.

Most believe that Lynch, which is the country’s largest accredited wholesaler of floral and potted products, will likely find support for a listing.

In Britain, total flower consumption has doubled in the past 15 years and the supermarket share of the floral category grew from about 55 per cent over the same period.

A sale was originally started last year, but was suspended due to the pandemic.

The company has in recent months been generating at least $40m of annual earnings before interest, tax, depreciation and amortisation, and the earnings are believed to be growing strongly.

The marketing is putting a multiple of 10 to 12 times EBITDA on similar businesses.

Lynch specialises in exporting Australian wildflowers throughout the world and describes itself as a global leader in floral innovation, research and development.

It generates revenue from the wholesale of plants and flowers and was purchased by private equity firm Next Capital in 2015.

Founded by Leo Lynch last century, the company has offices in Sydney, Melbourne, Brisbane, Perth and Adelaide. The business began as a flower grower and moved into flower distribution in 1984.

The private equity owner is exploring a listing of Lynch after it sold Funlab, which owns Strike Bowling bars, Sky Zone indoor trampoline parks and Holy Moley minigolf, to TPG Capital late last year for $250m.