Agricultural twines and net wraps manufacturer and distributor Piippo Oy has decided to seek listing in First North Helsinki. The recently listed United Bankers (HEL:UNIAV) is handling the IPO that is mainly geared toward local Finnish investors. United Bankers should net close to 300 000. A maximum of 550 000 shares are offered with a price of 7.5 Euros. Piippo is aiming at 10th of March 2015 as its first day of trading subject to approval.
The 73-year old family firm is headquartered in Outokumpu, Finland. Its products are sold in over 30 countries and make it a top five agricultural net seller. It has some 90 employees. Former Elcoteq-founder Antti Piippo is the Chairman of the firm. Antti & Pekka Piippo both have 433 500 shares and CEO Kari Hirvonen owns 153 000 shares. Together these represent the entire stock of the company shares prior to the IPO. Assuming full subscription, their combined ownership would be just under 65%. A total number of 1 570 000 shares at a price of 7.5 Euros would implicate a valuation of 11 775 000 Euros for the firm.
For 2014 the company reported sales of just under 15.6 million and EBIT of about 567 000. Balance sheet assets consists mainly of tangible assets of some 4.8 million Euros. Long-term debt is rather limited at 1.385 million Euros. On the short term side there is a lot of capital tied up in inventory valued at nearly 4 million Euros. Given the oil price coming down of late, there is some risk of a write-down for these.
With very little cash at hand and over 6.2 million in short-term debt vs. 1.8 million in cash & equivalents, one clear use for equity financing could be short-term debt repayment. However, current credit lines would allow to company to refinance through them as well if that was the chosen method. The proceeds are expected to substantiate a quicker growth pace through a stronger balance sheet and liquidity position. Since 2007 the company has maintained strongest in Finland credit classification at asiakastieto.fi, for which about the strongest 12% of companies can qualify.
Piippo expects demand to remain healthy in 2015 but prices to be under some pressure. EBITDA margin is still guided to remain in 2014 levels. A financial goal is to reach 20 million Euros in annual sales by the end of 2017. EBITDA target is 8% and a 4-year average equity ratio target is 40%. The company aims to pay out at least 50% of the annual result as dividends bearing in mind other concerns. A dividend proposal for 2014 fiscal year would suggest 2.5% yield.
***UDPDATE AFTER IPO***
Piippo has released details of the Initial Public Offering subscriptions. A total of 272 747 new shares were subscribed. This means that the IPO was undersubscribed. (just under 55%). Close to two thirds of the subscriptions were done by institutional investors with a total of 250 investors taking part. If all subscription are paid for, the company will have 1 292 747 shares. At 7.5 Euros per share this implicates a valuation of just under 9.7 million Euros. Nasdaq OMX has announced that Piippo has been accepted for trading in First North. First day of trading is 10th of March 2015.
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