It’s “Mission accomplished” for avocado distributor’s IPO
Mission Produce is going on the offensive in the booming global avocado market, with $75 million in new capital from its Oct. 1 initial public offering.
The Oxnard-based global avocado packer and distributor went public at $12 per share, a step down from its initial target of $15-$17 per share. The deal netted $75 million in gross proceeds for the company and valued it around $832 million.
Shares rose quickly after the start of trading, going as high as $15 before closing at $13.80, up 15 percent from the opening price. Mission trades on the Nasdaq as “AVO.”
The funding will help the company target growing markets in Asia and Europe by investing in avocado production at key times of and year to new, high-tech distribution facilities, including a “mega facility” expansion in Laredo, Texas. The heavily automated processing facility it unveiled in Oxnard in 2017 remains the largest in the U.S., CEO Steve Barnard told the Business Times, while its Peruvian location sits on a footprint twice as large.
“The real thing that catapulted us into the lead here is this avocado ripening process and the fact that we went national with it,” Barnard said on the company’s first day on the Nasdaq. “It’s pulling product through the system.”
Establishing the program meant significant hiring efforts, as does as a partnership with Chicago-based Hazel Technologies to extend the time the fruit can stay ripe.
“It takes some capital and a lot of human capital, building the team,” Barnard said.
That’s meant expansion at the company’s Oxnard headquarters, where it plans to move into a new office around the first of the year to accommodate its growing headcount.
As the largest distributor of avocados in the U.S., Barnard said Mission has some barriers to entry on its side.
“The industry is pretty fragmented with a lot of little guys who don’t have the volume or the wherewithal or the vision to grow,” he said.
Barnard owns around 8.7 percent of the company, a stake that’s now worth around $84.7 million. Around 16 percent of the company is owned by a Peruvian subsidiary Mission acquired in 2015, and Taylor Family Investment owns just shy of 14 percent.
Both entities sold around 950,000 shares on Oct. 1, alongside some 1.23 million shares sold by other existing investors. Underwriters were given the option of purchasing 1.4 million additional shares, potentially adding $$16.8 million in gross proceeds to the capital raise.
BofA Securities, J.P. Morgan and Citigroup served as bookrunning managers for the offering, and Roth Capital Partners, Stephens Inc. and D.A. Davidson & Co. acted as co-managers.
Barnard said the timing was right for Mission to make its public debut, despite the shocks sent through both the produce supply chains and the stock market by the COVID-19 pandemic.
“There’s no sense in waiting,” Barnard said. “It’s added some gunpowder to the ammo box here… It’s mission accomplished.”