Time to go public
Goodbody Stockbrokers’ Head of Research, Joe Gill, has called for Northern Ireland agri-food firms to raise their game and enter the stock market.
It’s time for agri-food companies in Northern Ireland to go public, according to Joe Gill from Goodbody Stockbrokers. The Republic’s food companies have expanded their equity value 33-fold over the past three decades while, during the same period, not one agri-food business in Northern Ireland.
“Publicly quoted Irish food companies are primed for further expansion,” he states. “In reality, they have not extended themselves. And they have extremely low debt levels. There are currently seven Irish agri-food businesses listed on the Dublin Stock Exchange, led by the Kerry Group. And all have significant potential for further growth.
“Structurally, the agri-food sector in Northern Ireland is in a similar position as to that which the industry in the Irish Republic found itself in three decades ago. So I see no reason why at least one business in Northern Ireland could not push for a stock market listing in either Dublin or London over the next five years.”
Commenting on the prospects for agri-food on the island of Ireland, Gill points out that, in terms of indigenous growth, the key driver will be the seasonal production of beef and dairy products from grazed grass.
“Coping with the challenge of volatility will be an issue confronting all our food businesses during the period ahead,” he says. “And we are already seeing evidence of this courtesy of the developments taking place on the world’s dairy markets. However, all of the general indicators for agri-food throughout Ireland are extremely positive and I foresee the industry doubling in size over the next ten years.”
But as Joe Gill goes on to point out, securing indigenous growth is one thing. Using Ireland as a base to develop a multi-national food business is another challenge entirely.
“In the case of those companies listed on the Dublin Stock Exchange there was a key inflexion point that led to them securing double-digit growth,” he explains. “The Kerry Group, for example, acquired a key flavourings and ingredients business in the United States. This was the used to grow a world leading business within that sector. In the case of Glanbia, the decision was taken to acquire a number of sports nutrition businesses, again in the United States. Both businesses had the vision and put in place the required business plans to allow them meet their objectives.
Gill added that it has not always been plain sailing: “The value of these companies has ebbed and flowed over the past twenty-five years. There have been many challenges and road blocks. Yet the management teams in these businesses have persevered and, in so doing, have delivered for the companies in question and their shareholders.”
With regard to sourcing capital for expansion, Gill referenced a group of international fund managers with a core interest in agri-food.
“These people have an incredible hunger to make money,” he said in conclusion. “It took them a while to get to grips with concept behind the co-op/PLC hybrid that underpins the structure of most agri-food operations in the Republic of Ireland. And these same people represent a potential source of funding for similar businesses in Northern Ireland with an international development model in mind.”
