Australia’s largest producer and marketer of extra virgin olive oil is now listed on the ASX.
- Cobram Estate Olives was established in 1998 by Paul Riordan and Rob McGavin
- It has groves in Victoria and the US, as well as a nursery, three mills and a laboratory
- The company’s 2021 harvest is estimated to account for 71 per cent of Australia’s olive oil crop
Cobram Estate Olives, which recently changed its name from Boundary Bend Limited, has been operating for 23 years and had 800 shareholders.
Chairman and co-founder Rob McGavin said the time was right to list.
“With that many shareholders it becomes a bit unruly and maybe a bit unfair on those that do need to sell, because there’s not much liquidity when you’re an unlisted stock,” he said.
“It’s probably just the right thing to do and it allows us access to capital markets if and when the opportunities arise.”
Mr McGavin said none of the founding shareholders nor directors were intending to sell out.
“I think there’s a lot left in the business and we want to continue that ride.”
Compliance, not capital raising
The company was originally down to list on the ASX to raise $75 million to focus on growth in California, but Mr McGavin said those plans had changed.
“The money we were raising was going into the bank, strengthen our balance sheet and probably give us more head room to take advantage of opportunities if they arise.
“We didn’t want to do it at less than $2, so we thought let’s just compliance list; we don’t need the money any time soon.”
A compliance listing is when a privately owned business lists and quotes its existing securities without making a public offer.
Cobram Estate Olives is planting 500 acres in California this year and that project is fully funded.
Mr McGavin said there were no immediate plans for capital raising; the company had no debt on its US assets, he said, so Cobram Estate Olives could easily buy land and then look at an equity raising or funding it through cash flow and debt.
California is in drought at the moment and the area most under stress is between San Francisco and Los Angeles.
Cobram Estate Olives has groves further north and is able to access surface and ground water.
Mr McGavin said the groves would also survive if they could not be watered, which was different to many other horticulture crops.
“We’re still in good shape and none of our groves are suffering at the moment; let’s hope it rains soon.”
Water policy still a concern
Mr McGavin has been outspoken on how water is managed in the Murray-Darling Basin, and said the rules needed to be changed so only consumptive users could buy temporary water.
“It’s just ridiculous to think we are debating whether it’s a good idea that someone who can’t use the water can actually buy something that expires; it’s needed to drive regional Australia,” he said.
“The last drought wasn’t even that bad and look at the damage that speculators in the market caused.”