Breeder/propagator Dümmen Orange (DO) denies the news regarding a potential stock market listing of the company. Several sources, including Dutch daily newspaper De Telegraaf and sites like executivefinance.nl, reported last week that DO is preparing for a stock market listing in 2019. Whether this is true or not, the financial sector has been active in the field of the horticultural industry is what we learned from talking to a few advisers.
A number of different corporate bankers of Dutch and foreign banks confirm that Dümmen Orange is preparing to go to the stock market in 2019, according to De Telegraaf. But if they want to be listed on the stock market, their turnover and profits have to increase, wrote the newspaper.
Spokesperson Marco van der Sar of Dümmen Orange stated that the news regarding a potential stock market listing of the company is untrue. “Our focus is on increasing our scale, innovation and customer satisfaction. We aren’t busy with the stock market at all.”
De Telegraaf said that according to a certain source, DO had made agreements with an American corporate bank about guidance with a potential stock market listing when they met them to arrange their refinancing. Dümmen Orange has been in the hands of British private equity party BC Partners since 2015. They bought the company for around €500 million.
An interesting detail is that in the beginning of 2015, when DO was still called DNA Green Group and the majority share holder was Amsterdam-based investment company H2 Equity Partners, applying for a stock market listing was one of their long-term plans. Biense Visser, chairperson of the board, said to Het Financieele Dagblad at the time: „It would be the most logical option for our company, but there isn’t a concrete plan yet.”
Listed companies more popular
A possible stock market listing of Dümmen Orange would fit in with the current mood on the financial markets. Listed companies are very popular at the moment. A relatively large number of companies has gone public lately, is what Het Financieele Dagblad noticed last month. According to analysts in the newspaper, this concerned mostly companies owned by private equity parties.
Going public would, via the issuing of shares, bring in some extra cash for the share holders, including the private equity party. But it’s not something that would happen overnight. Spokesperson Van der Sar confirmed that a stock market listing would take at least a year of preparations. „And even those kinds of preparations aren’t taking place at our company at the moment”, he added.
According to an acquisition finance adviser who wants to remain anonymous, there was more news in week 18 about an internationally operating breeding and propagating company with Dutch roots. No names were mentioned, but shares of this company were offered in the financial world. Could it have anything to do with Dümmen Orange, which has been trying to expand its product portfolio with the help of private equity capital for a while now? „As pioneers in the floricultural sector, they invest large sums in R&D. They’ve already got a good, large-scale distribution network and they’re expanding their R&D autonomously and they use private equity for their ‘buy and build’ strategy, for which they’re constantly buying high-quality, new varieties”, analysed the adviser.
Time to market
Investors are more interested in large breeders in the vegetable sector than in their colleagues in the floricultural sector. Stock market listings are more common for vegetable companies say experts, because healthy, sustainable food produce is a very important item on a global level. They believe that in all horticultural segments, relatively small breeders have to increasingly contemplate their existence. Large companies, with their new breeding methods and large labs, have a much faster ‘time to market’.
Can small breeders keep up with that? They don’t have the means, so they’re using traditional breeding methods. Their existence largely depends on the life cycle of their varieties and many growers have their pension locked up in the company. That’s a gamble, a hobby. Hence the advice from experts for small breeders: sell your variety to a strong, innovative, market oriented party, who will continue to develop it in its own way. With a transaction like that, you’re also making sure your pension is safe. In that regard, it’s like a stock market listing.