PE ‘hangover’ weighed on Inghams, says CEO

Inghams chief Mick McMahon says negative perceptions of private equity may have weighed on his group’s listing.

Inghams CEO Mick McMahon during the Global Food Forum. Picture: Aaron Francis.

Inghams Group chief executive Mick McMahon has conceded the negative perceptions of private equity floats may have weighed on his group’s listing late last year.

There has been a persistent focus on some of the disappointing cases of recent years, headlined by the now collapsed Dick Smith Electronics, while struggles at Spotless and Myer have also ensured broad investor caution.

Ingham’s, in contrast, has performed steadily since a November float led by private equity group TPG that raised $600 million at $3.15 a share.

It closed on Tuesday at $3.18 a share.

“I think any investor looking at a business should first look at the business, not the prior ownership,” Mr McMahon said at The Australian’s Global Food Forum in Melbourne yesterday.

“So under­standing the supply chain, the products, the history of the business, and the markets in which they operate, and the opportunities ahead of it.

“But fundamentally you’re also supporting a management team, and you want to be looking at the track record of those people,”Mr McMahon said.

The Inghams boss would not be drawn into a vociferous defence of private equity despite suggesting that investors should focus on other drivers of future stock performance. The poultry producer endured a rocky road to market as TPG was forced to retain a larger stake than it planned and had to slash the listing price by more than 15 per cent amid choppiness on global markets.

Mr McMahon said he was uncertain if the discount had taken the pressure off, but he noted the private equity influence may have scared off some investors.

“I would say that we saw a lot more interest offshore ... than we saw domestically,” he said.

“I think probably the majority of that is the private equity hangover.”

“I’m not here to defend private equity, but there are plenty of successful private equity IPOs.”

Mr McMahon pointed to another company in the food space in Costa Group as a recent success story, while reaffirming Inghams was “very much on track” with its forecasts.

“If anything, we are generating more growth than expected,” he said.