Mort & Co., Australia’s largest feedlot company, which sells 180,000 head per year, is currently pursuing a pre-initial public offering (IPO) capital raise of between $20 million and $40 million, conducted by investment bank, Moelis & Company, before listing on the Australian Stock Exchange (ASX) at a value of $175 million, according to ABC.net.

 

"It has been something we have been looking at for a while," Mr. Mort told The Australian Financial Review. "Supply is tight but all our feedlots are full, if that says something. I think the beef markets are strong. I think beef-producing properties will also remain strong."

 

Recent global trade developments, including the signing of a free trade agreement with China and the opening of cattle markets in Southeast Asia, have resulted in a boom for Australia’s cattle market. On the back of this growth, Mort & Co. is planning to expand its handling capacity from 180,000 head per year to 225,000 head per year.

 

Mort & Co. is comprised of three sites, the 5,200 hectare Grassdale in southern Queensland with a feedlot capacity of 54,000 head, the 2,200 hectare Pinegrove in southern Queensland with a capacity of 25,000 head, and the 1,607 Gunnee site in New South Wales with a handling capacity of 10,000 head.

 

Prior to the IPO planned for 2017, investors are being offered stakes in the Moelis Australia Beef Syndicate which will manage Mort & Co., according to Farm Weekly. Moelis Australia Asset Management will be a cornerstone investor, committing $5 million to the syndicate, which is aiming for an internal rate of return of 25% after a cash dividend yield of 4.2%, and all fees. And if the IPO advances as planned at a value of $175 million, it would translate to a price to earnings ratio of 8.1 times for the first year.

 

Mr. Mort told ABC that last November, Mort & Co. launched a branded line of beef products including hormone-free and Wagyu products, however he dismissed any possibility that the company would expand into the meat processing sector.

 

"Margins has [sic] definitely come under pressure, as have most in the processing sector and the feedlotting sector, and there's no doubt about that and it's cyclical I guess," Mr. Mort told ABC. "Whereas in the processing sector they're having difficulty getting kills, in the feedlot sector we do have a much larger range of cattle that we can buy and we're still maintaining our numbers in the feedlot,” adding, "We like to think that we're efficient feedlotters and we've got good economies of scale."