My Food Bag shares slump on NZX debut, down 8.1%

Friday, 5 March 2021

My Food Bag has a humble origin story. Is it the next thing to invest in? (Video first published in February 2021)

Shares in My Food Bag slumped on their first day of trading on the NZX on Friday, as the stock was hurt by general market weakness.

My Food Bag has been hailed as the biggest IPO to hit the NZX in seven years, as the meal kit company’s founders and investors sold shares to new investors at $1.85 each, raising $342 million and valuing the company at just under $450m.

The shares were down 8.1 per cent at $1.70 in mid-afternoon trading on Friday, with 3.4 million shares changing hands, the biggest volume on the market. They failed to reach their offer price on the first day, trading between $1.65 and $1.76.

Sharemarkets have weakened since the company’s IPO price was set in a bookbuild, as optimism about the outlook for economic growth pushed up bond yields, reducing the attractiveness of equities. The benchmark S&P/NZX 50 Index fell about 7 per cent last month even though company profits during reporting season were generally in line or better than expected.

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

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The benchmark was down 0.6 per cent at midday on Friday, following overseas markets lower as the S&P 500 fell 1.3 per cent on Thursday, its third straight loss after a spike in bond yields.

“Since the bookbuild was done, and people bid for stock, markets have been particularly weak,” said Michael Sherrock, a portfolio manager at Nikko Asset Management, which didn’t take part in the IPO. “The headwind of weaker market locally, and offshore overnight as well, certainly doesn’t help general sentiment around markets.”

No new information had emerged since the offer was launched, suggesting the share price weakness was due to general market sentiment, he said.

My Food Bag’s listing was supported by three key institutional investors, who undertook to take shareholdings of more than 5 per cent, and the shares were also offered through three major brokerages and to the company’s extensive range of current and past customers, and employees. It was criticised by some brokers and investors as being overpriced and having a slower growth outlook.

Just $54.8m of the money raised in the IPO was headed for My Food Bag’s pocket, with $16.7m used to fund offer costs, $38.2m to repay bank debt, and $287.3m going to existing shareholders who were selling their 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 Telecom 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 brand is now recognised by about 88 per cent of people.