My Food Bag valued at $450m ahead of sharemarket listing

Thursday, 11 February 2021

My Food Bag plans to list on the sharemarket at $1.85, valuing the meal kit delivery company at just under $450 million.

On Thursday, My Food Bag detailed its plan to list on the NZX and ASX on March 5, raising as much as $342m in an initial public offering (IPO) through the sale of 155.3 million existing and 29.6 million new shares.

My Food Bag was founded in 2013 by Cecilia and James Robinson and is fronted by celebrity chef Nadia Lim and backed by former Spark chief executive Theresa Gattung. It has benefited from demand for convenience food and healthy living and has delivered more than 85 million meals to more than 300,000 households since it started.

Its largest investor, Waterman Capital, owns two thirds of the company and expects to sell down its stake to 15 per cent as part of the IPO. The Robinsons, Lim and Gattung, whose interests own 27 per cent of the company, will also sell into the offer, reducing their combined holding to under 9 per cent.

My Food Bag will list on the sharemarket at $1.85, giving the meal kit delivery company a value of just under $450 million. (File photo)

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Funds raised will be used to repay bank debt, enable existing shareholders to realise part of their investment and give My Food Bag flexibility to pursue its growth strategy, chairman Tony Carter said.

“Our growth will be underpinned by continued leadership in the meal kit market and expanding our food-based offerings to align to consumer trends,” he said.

Cecilia Robinson, Nadia Lim and Theresa Gattung of My Food Bag.

Director Chris Marshall, founder of Waterman Capital, said: “When we invested in 2016, we saw a successful business that was well positioned to continue to grow its core offering and had the potential to leverage its platform to expand more broadly within the food and grocery sector.”

“The business is extremely innovative and customer centric, which is an exciting combination. In addition, the online food delivery sector is the beneficiary of some very favourable long-term macro trends.”

Milford Funds, Harbour Asset Management and Investment Services Group, have all committed to take at least 5 per cent stakes in the company.

My Food Bag offered priority allocation in an initial public offering to its 315,000 customers and staff last month.

More than 10,000 customers and staff have since registered to receive a priority allocation in the IPO, the company said.

Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene, said the IPO would benefit from My Food Bag’s strong marketing.

Still, he said the company received “a very large boost” in trading from the lockdown, from relatively muted growth prior to that, and the shares were “on the expensive end”.

“It is priced for perfection, and they will need to be able to execute on their growth plans to be able to warrant that valuation,” he said, although he noted the dividend yield of 5 per cent would be attractive for many investors.

Henry Chung, director of investment banking at Jarden which is the joint lead manager of the offer with Craigs Investment Partners, said My Food Bag's listing gave investors the opportunity to get involved in a sector they had so far been unable to access on the NZX.

The listing would encourage other companies to follow suit and give investors access to new industries, Chung said.

“It’s our view this is a clear sign of general confidence, and what is set to be one of the busiest years on the market we’ve seen in some time.”

While institutional investors were supportive of My Food Bag, retail investors were showing strong interest in household brands they see and use day-to-day, he said.