Happy Valley Nutrition (ASX:HVM) had a disappointing start to listed life on the ASX, dropping as much as 35 per cent on debut.

The Waikato-based infant formula maker traded as low as 13c – a hefty discount to its 20c IPO price – not long after lighting up the boards this morning.


Just six weeks ago, Nuchev (ASX:NUC), which specialises in goat infant formula, made a 23 per cent gain on its entry to the bourse.

While Nuchev is already importing and selling milk, Happy Valley is still working on building its facility.

“The company’s immediate actions now turn to finalising the basis of the facility’s design, acquiring industry leading talent and commencing site preparation design work,” general manager Greg Wood said this morning.

“The ASX listing enables Happy Valley Nutrition to advance its ongoing discussions with potential strategic partners.”

The company raised $12.5m, which chairman Ivan Hammerschlag said in the prospectus would be enough to last 12 months.

But he admitted Happy Valley would need up to $328m more to built the plant. Hammerschlag said the company intended to find “an appropriate strategic partner”.


Creating ‘an enduring legacy’

Once the plant is built, Happy Valley hopes to operate under a business to business model. The plant will be in New Zealand’s Waikato region.

Waikato has 33 per cent of New Zealand’s dairy herds and produces 22 per cent of all milk solids. This is more than any other region in New Zealand.

“There are a number of parties around the world who see the value in a vertically integrated, nutritional grade milk powder facility that has access to high quality New Zealand milk,” Wood said.

“Happy Valley Nutrition is committed to creating an enduring legacy for all our stakeholders through the production and delivery of safe, nutritious, premium New Zealand milk products to the world.”

New Zealand is the seventh largest milk producer and the world’s largest exporter. It accounts for 25 per cent of the world’s exports worth $NZ18.1 billion ($17.4 billion).

China is the top destination for New Zealand milk accounting for $NZ5.4 billion, while Australia is next with $NZ1.2 billion.