FarmWorks Eyes Listing to Support National Expansion
14th May 2008
The West Australian
WA rural services company FarmWorks is eyeing a public listing at the end of the year to fund a national expansion.
The privately-owned group is also evaluating private equity offers as it weighs up future funding options to pursue growth opportunities created by the improving outlook for the agricultural sector.
"We have always stated that we would like FarmWorks to take on a national role," founder and managing director Kevin Gammage said.
National horizon: FarmWorks general manager Fred Lyon, left, and managing director Kevin Gammage
"We are in the situation now where there is no WA-based provider of agri-services," he said. "There is an opportunity for another player to come in and differentiate itself and vertically integrate aspects of the business."
FarmWorks was established in 2001 by a group of largely former IAMA staff to fill the gap in farm merchandising left by the collapse of Rural Traders Company and the sale of IAMA to Westfarmers in 2001.
The Osborne Park-based company offers finance, livestock, property and rural merchandise services to more than 5500 growers across eight branches and 12 agencies in rural WA plus operations in Queensland and South Australia.
It is jointly owned by Caroline Gannage, Roy Morgan, Michael Pedley, Edmund Lyon, Clare Madelin and Peter Foreman.
While figures are not public, Mr Gammage said in 2006 that the company had built up merchandise turnover to $70 million, livestock broking to $25 million and had a loan book of around $40 million under a deal with BankWest.
FarmWorks is yet to test the appetite for a float, but Mr Gammage said agricultural stocks were attracting more positive investor sentiment due to increasing demand for soft commodities.
"Ag stocks are on the up and up and we can only go out there and shake the trees and see what happens," he said.
"The demand for agricultural products is going to increase dramatically and obviously for input and service providers that sit alongside that, whether they are providing finance, purchase of land or providing inputs, are going to go along for the ride."