Huon, page-27

potential block trade mentioned in the fin review. Owners selling down their stake

Capital markets bankers are out fishing for the next big deal. And sources tell Street Talk it may involve a block trade in Huon Aquaculture Group.
The industry is firmly in the spotlight after ASX-listed salmon producer Tassal announced it would raise $100 million from investors on Thursday. The capital call is to help fund new fish farms in Tasmania and new equipment, as it tries to offset the loss of young salmon in the Apple Isle's Macquarie Harbour, where regulators have sought to slash salmon fishing levels.
Huon (with a market capitalisation of $424 million) is the little brother to Tassal (which has a market value of $738 million). But Huon trades on an enterprise value of 6.8 times FY17 earnings before interest, tax, depreciation and amortisation, while Tassal trades at 9.7 times.
One reason Huon trades at a discount to the sector's big fish is the fact Huon's founders, husband and wife team, Peter and Frances Bender, kept a 68 per cent stake when Credit Suisse floated the business in 2014.

The means there is only a small free-float, and very little liquidity for institutional investors to enter and exit the register.

With Tassal in the market, investor appetite will become clear and bankers are understood to be seeking meetings with the Benders about a block trade to sell down at least part of their stake
If the Benders reduced their stake to say 50.1 per cent to maintain control, this would see around 15.7 million shares worth $77 million come out at current prices.
While the Benders are the very definition of patient capital, bankers are likely to make a strong case for a sell down.


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