Goat’s milk infant formula company Nuchev eyes ASX after $7m raising

Nuchev is still weighing up its options on a public listing, but major shareholder and chief executive Ben Dingle said on Tuesday there were strong reasons to proceed down that path, with market appetite for the goat’s milk formula brand strong in both Australia and China, and the broader infant formula sector attracting substantial investment.

“There are some compelling reasons around why you would IPO in the current environment,” Mr Dingle said.

The Oli6 brand has been generating substantial sales growth in Australia, which was a big plus for the company’s sales in China, with mothers placing great important on success in a company’s home market.

“Ultimately, mum has got to see value in the brand,” Mr Dingle said. “Every month, we are breaking sales records,” he added.

Mr Dingle declined to give specific figures but said that the company had generated higher sales in the first three months of 2017-18 than in the entire 2016-17 financial year. Nuchev had sought between $5 million and $7 million in the raising. “It closed really quickly and we were over-subscribed,” he said.

Nuchev has been advised by Greenstone Partners and helped along by Melbourne-based Evans & Partners in the raising. One of the new shareholders brought in as part of the capital raising is Kirwood Capital, which has links to the Ring family, the original founders of the Swisse Wellness vitamins business, sold for $1.7 billion in 2015 to Hong Kong-listed Health & Happiness.

Mr Dingle is Nuchev’s major shareholder and has a strong track record after earlier in his career co-founding New Zealand’s Synlait Milk, which is now a $1.4 billion company and a supplier to sharemarket darling A2 Milk.

Nuchev has pursued a deliberate strategy of expanding in pharmacy chains first, because that delivered important credibility to very knowledgeable mothers in China who research online extensively.

The company generates about half of its sales in Australia and half in China. It is stocked in about 1000 different pharmacy outlets in Australia, including Chemist Warehouse and Terry White Chemmart, and is also in the independent supermarket sector through IGA.

The total goat’s milk infant formula market in Australia is worth $105 million annually, from about $3 million just four years ago. Goat’s milk formula makes up about 10 per cent of the total infant formula market in Australia, with nutrients found in goat’s milk shown to help gut health and digestion.

Goat’s milk is estimated to hold about 5 per cent of the overall infant formula market in China.

Meanwhile, rival infant formula company Bubs Australia on Tuesday said it had now finalised a $20 million fund raising at 60¢ per share to partially fund a $38 million acquisition announced in early November of goat’s milk company NuLac.

It secured $15 million in an institutional share placement and $5 million from a share purchase plan. Bubs shares are now sitting at around the 75-cent mark, having soared to $1.07 on November 7.

Infant formula stocks led by the biggest player, Bellamy’s Australia, have made generally made strong share price gains in the past few months.


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