Mad Butcher goes public

The Mad Butcher went public today, joining the stock exchange through its shell company Veritas Investments.

Shares in the retail butchery franchisor effectively began trading at midday, when its acquisition by Veritas Investments was complete.

Veritas, formed last year through a backdoor listing on the NZX, raised $25 million at $1.30 per share to fund the $40 million cash and scrip purchase of the Mad Butcher franchise

Its shares dropped 2c to $1.55 soon after midday.

The offer was over-subscribed by more than twice the number of shares available.

The deal makes Mad Butcher chief executive Michael Morton, who bought the retail butchery franchisor off founder Sir Peter Leitch in 2007, the biggest shareholder in the company, with a 42% stake, and he has pledged not to sell any shares until the 2014 results are published.

He joins the Veritas board now the deal is complete.

Collins Asset Management Ltd is the second largest shareholder with a 17% stake.

The Mad Butcher franchise business expects to pay a dividend of 7c per share in 2014, but says nothing will be available this financial year.

It is forecasting net profit of $729,000 on $32.3 million in sales in the year ending June 30, rising to $4.2 million on $35.8 million in revenue the following year.

The Mad Butcher franchise co-ordinates national marketing and product procurement and supports individual franchises around the country which collectively generate more than $150 million in annual sales.

Veritas was formed from the shell left by the winding up of Salvus Strategic Investments, which sold assets and returned capital to shareholders.

Who's behind Veritas?

Veritas Investments founding directors Mark Darrow, Tim Cook and Simon Wallace formed the company from NZX-listed Salvus Strategic Investments in 2011 to seek acquisition investment opportunities.

They have been recently joined by independent directors Phil Newland and Stefan Preston.

Shane McKillen, who set up Eftpos technology and network provider Netco and jointly funded 42 Below vodka, will also join the board alongside Mr Morton.

gbond@nbr.co.nz