GPS Coordinates: 17.887657, 76.419119
- We have 250 cows and cattle. Out of which 150 are milking cows. Funding to ramp up to 2500 cows within 3 years.
- We produce milk and yoghurt in our own factory and sell it to distributors and wholesalers.
- Dairy farm uses a vertical orientation model to accommodate 2,500 high-yielding cows.
- Factory can process 50K litres of milk per day but we currently produce 1,000-2,000 litres of milk per day.
- Managing Director has more than 20 years of experience in this industry.
- One of the stakeholders is a Chartered Accountant and is also the Chief Strategy Officer of the company.
- Physical assets include land, factory, machinery valued at $8 million.
Products & Services Overview
We have our own dairy farm and manufacturing facility to produce milk and yoghurt.
Facilities Overview
Own 26 acres of land with farmland, processing factory, coldrooms, freezer trucks and shed.
Current Funding requirement
1) The company needs to expand the milk production capacity to25,000 liters per day(by buying about 1,800 new cows in the farm). 1,800 high quality Friesien-Holstein cows and ancillaries will cost about US$ 3.4 million.
2) There is a bank loan of US$ 2.2 million that needs to be restructured. Need US$ 0.7 million.
3) US$ 1.0 mil is required for listing expenses for an IPO on the Australian Securities Exchange (“ASX”) – on the agriculture section. Preliminary discussions with Australian investment bankers in 2018 indicated that they would be able to list the company on the ASX with an expected multiple of 7x. This would give the company a valuation of above US$ 50 mil if the 2018 raw asset-based valuation was used as a benchmark.
Proposal for the Investor
To do the above company needs the following:
a) US$ 2.5 mil to fund the IPO expenses etc – an equity of 25% is offered by the shareholders,
b) US$ 2.5 mil loan to put it into a shape for the IPO due diligence and buy some cows,
c) Interest of 6% pa on the loan above and accrued interest payable in full as a lump sum within 60 days from receipt of the IPO proceeds – to be guaranteed by key shareholders.
Investment Rationale and Exit Strategy (say by end of year 4)
1) Post-money, the Investor gets 25% of Company for US$ 2.5mil, a discount of 30%,
2) The IPO upside of at least 7x when he exits with about US$17 mil. If A2milk’s example is applied, this will exceed US$ 30 mil.
3) The loan interest income of about US$ 0.8 mil.
The cash value ROI of the Investor’s returns, post IPO, will exceed US$ 18 mil or 340%.
4) In addition, the Company is in talk with Malaysian parties (proposal docs are available) to replicate the same project + grass - subject to funding availability. The Investor will ride along in this 2nd project as well. These have not been factored into the ROI above.
Due diligence pack
Unnati will provide copies of audited & management accounts, asset valuation report, Information Pack, operating licences, land titles, bank loan documents and key employee profiles upon request – subject to a signed NDA. The shareholders invite the Investor to a field visit upon formalities are cleared.
Looking forward to your early response. Please contact the undersigned for the queries, if any.
Best regards,