Australis Set for IPO

Chilean fishing company Australis Seafoods is expected to raise more than CLP33bn ($72m) when it prices its IPO this morning. The deal follows a string of transactions from the sector, but is seen coming cheap to competitors. Books were due to close yesterday for the sale of 187m shares, representing a 13% free float. Market expectations range from CLP175-CPL190, indicating a likely CLP32.73bn-CLP35.53bn size. The third Chilean fishery to IPO in the last 7 months, Australis is seen as inexpensive against listed peers. For instance, local shop Bice calculates 8.9x 2011 EV/Ebitda based on a fair value price for the company, compared to a 13.8x industry average and 15.6x for AquaChile, which recently went public. Bice spots fair value at CLP209.5 per share, and recommends buying at up to CLP184.4. It is “one of the most profitable companies in the Chilean salmon farming industry, achieving in 1Q11 a consolidated Ebitda/Kg of $2.1,” IMTrust says. It spots fair value at CLP192, and recommends the stock at up to CLP178. IMTrust notes that, in addition to weather, regulatory and other risks that affect the industry as a whole, the main risk for Australis is its short 3-year history as an integrated unit. The company, established in 2007 to consolidate the various fish businesses of Chilean businessman Isodoro Quiroga, consists of three branches: Australis Mar, which raises and harvests salmon and trout, Landcatch, which produces salmon eggs and smolts, and 50% of True Nature Holdings, a US salmon products distributor acquired this year. Australis plans to use the proceeds to improve production, and expects to spend $274m through 2015. It had $23.0m equivalent in Ebitda in 2010, compared to $13.7m in 2009. IMTrust forecasts $72m Ebitda for this year, but warns of a possible decrease as soon as 2012 due to falling prices caused by increased competition as producers across the board ramp-up production to levels last seen before a disease struck Chile’s salmon business in 2008