THE $500 million float of Australia biggest milk processor, Murray Goulburn (MG), will be pitched to investors on an earnings multiple of 7.7 times earnings, with an implied yield of 7.4 per cent, according to documents released on Friday.
It is the first time the 65-year-old farmer owned co-operative has sought to raise capital through external investment.
Murray Goulburn's 100pc farmer ownership will remain unchanged, with the available units in the capital raising having no voting rights.
But investors in the Murray Goulburn Unit Trust will be eligible to receive annual and half-yearly distributions, which will be equivalent to dividends paid to the co-operative's shareholders.
Murray Goulburn unveiled an indicative price range on Friday of $2.10 to $3.20 a unit. This implies a full year 2016 price earnings multiple of 13.7x to 17.7x. It hopes to raise the $500 million by July this year.
"The formation of the MG Unit Trust … will allow MG to complete planned investments in world-leading manufacturing capability and achieve increased market reach," managing director Gary Helou said.
"In turn, this will further our strategic shift towards premium value-added dairy foods and reduce MG's exposure to the volatility of the dairy commodity price cycle."
This cash injection will fund growth projects, such as new plants and plant upgrades, that underpin MG's promise to deliver a higher milk price for its farmers.
The "Friends of Murray Goulburn Offer" will be open until June 9.
Farmer shareholders approved the trust at an extraordinary general meeting earlier this month at which Mr Helou said at the meeting Murray Goulburn didn't have "a moment to waste" in ensuring the co-operative had sufficient financial firepower to capitalise on the Asian dining boom.
"Global demand for dairy foods continues to grow, particularly in Asia," he said.
"All global dairy companies are racing to capture a share of these growth opportunities and in this context, MG does not have a moment to waste.
"We will invest the new capital we ultimately raise … to ensure we are well placed to meet and serve the growing needs of dairy customers and consumers in Australia and internationally for premium, quality, Australian made dairy foods."
Macquarie is lead manager on the float.
