IPO Watch: Floral company Lynch becomes the biggest ASX IPO in 2021 but shares have slightly… WILTED
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Florist company Lynch (ASX:LGL) has hit the ASX and is the biggest IPO of 2021 so far.
Lynch is a wholesaler of flowers and potted plants and has a strong position in Australia and China.
Despite its fresh listing it is over a century old, having been founded in 1915 by Greek immigrant Leo Lynch. It was passed down a few generations until private equity group Next Capital bought a stake in 2015.
The company raised $206 million at $3.60 per share. Upon its ASX listing, shares saw a slight drop to $3.50 – a 2.78 per cent decline.
One of the company’s main selling points was future upside in supermarket penetration in the Australian market. Australia’s penetration is only 19 per cent compared to the UK’s 55 per cent.
Lynch is the largest supplier in this market, providing 88 per cent of consumer-ready floral products to supermarkets.
Lynch also has a presence in China but China’s market is at an even earlier stage.
Lynch claims there are no vertically scaled integrated players in China that can provide high quality, stable, year-round and scaled volume to retail partners.
The company plans to increase production capacity through developing secured land, enhancing yields at existing farms and expanding penetration into mass market sales channels for floral products.
Most pertinently, the ASX IPO will allow Lynch to complete the purchase of Chinese rose grower VDB Asia.
“Over our 100-year history, Lynch Group has established itself as a pioneer in the Australian floral industry becoming the #1 wholesaler and partner to supermarkets in the floral category,” declared Lynch CEO Hugh Toll.
“Our know-how, systems and expertise are proving highly transferable into the significantly larger and fast-growing Chinese market where we are replicating the success of our vertically integrated Australian model.
“I’d like to thank our existing shareholders for their continued support and welcome our new shareholders to the register as we enter this exciting new phase of growth for our company.”