Japfa’s milk-producing business in China, AustAsia Investment Holdings, has applied for its listing in Hong Kong, which will result in two separately run entities with more flexibility and better focus to grow their respective businesses.
As part of the IPO, existing Japfa shareholders will receive a distribution of AIH shares in specie, potentially resulting in Japfa shareholders holding shares worth more than what Japfa shares are trading at now.
The number of AIH shares to be distributed to Japfa shareholders is to be determined.
This deal is subjected to approval by shareholders at an EGM to be called.
Following the listing of AIH, the remaining business, Japfa Animal Protein will continue to run its animal feed and chicken, beef and seafood farms in Indonesia under Jakarta-listed PT Japfa Comfeed Indonesia. Japfa will also continue to hold its pig farming business in Vietnam as well as similar but smaller ones in India, Myanmar and Bangladesh.
With its own listing, AIH will have another avenue to access capital to further grow its dairy business in China, while Japfa can better focus its financial resources on the remaining businesses.
See also: Sembcorp issues $350 mil of guaranteed notes due 2036 at 3.65%
Tan Yong Nang, Japfa’s executive director and CEO calls the separation of AIH and Japfa a “watershed moment”.
“Japfa Animal Protein has emerged stronger from the Covid-19 down-cycle and played an important role in providing food security and minimising disruption to the supply chain in countries that it operates in,” he says.
“We are confident Japfa Animal Protein is well-positioned in shaping the animal protein industry with a multi-year runway to take advantage of the growth opportunities in these countries,” adds Tan.
Upon completion of the split, Japfa Animal Protein would have a pro forma FY2021 revenue of more than US$4 billion with a corresponding Ebitda of US$374 million.
According to Japfa, based on recent transactions of stakes in AIH late last year, Japfa’s 62.5% stake in AIH is worth $992 million, or 49 cents per Japfa share. Its stake in PT Japfa Tbk is similarly valued at 49 cents per Japfa share, using the Indonesia-listed entity’s current market value as a gauge.
In contrast, Japfa closed March 29 at 65 cents, up 0.78% for the day and up 4.84% year to date.
