Palandri Wines is on target to complete its $30 million UK capital raising and the acquisition of a further Margaret River vineyard, according to executive project director Rob Palandri.
The company is also aiming to raise between $50 to 60 million through a managed investment scheme in Australia, mainly through financial planners.
Investors in the managed investment are being offered a stapled security which will give them an interest in the Mount Barker vineyard development and 400 shares in the Margaret River Wine Production Company.
This company owns 100 per cent of Palandri Wines, as well as the winery and cellar door sales outlet in Margaret River. It also owns Baldivis Estate winery, which was acquired last year.
According to the current prospectus for the managed investment scheme, each $13,000 investment should be cash-positive by year four. In the fourth year, the $3,800 management fee will be covered by an estimated $4,133 of income from trading stock.
Total investor income for the 18-year project is estimated to be $76,385, which gives an internal rate of return of 16 per cent.
Rob Palandri says the current fund raising in both Australia and the UK will be used to buy the Amberley Estate and Rosabrook Estate wineries, both situated in Margaret River.
This will allow the company to expand its wine production from 113,000 cases this year to 303,000 by 2003.
“We have seen a lot of vineyard offerings putting all their capital into growing grapes and little into developing brands,” he says.
“The tax advantage of agriculture was distributing the cash flows into vines and very few companies know how to develop brands.”
Palandri says most wineries in Australia only produce about 10,000 cases a year, which is too small to compete in domestic and international markets.
The industry is dominated by Southcorp and Fosters, but Palandri makes no secret that he hopes to create a “mini-Southcorp” in the next couple of years, creating Australia’s fourth-largest wine-producing company.
“We are not in the business of growing grapes, but in the business of developing brands,” he says.
The company has launched its Aurora brand, which is in 1000 outlets in Australia, and will be joined by Baldivis this year.
Internationally, the company is in the UK and US markets, but hopes to expand into the Japanese and Swiss markets this year. Future markets include South East Asia, Denmark and the Benelux countries.
Palandri says the aim is to float the company in the next 12 to 15 months with dual listing on both Australian and London stock exchanges. The UK capital raising is offering 6 million shares in the Margaret River Wine Production Company.
The final number of shares to be issued in the company will total 21 million, including those allocated to investors in the stapled securities.
“We are not really a tax-effective scheme, it is more about investing in lifestyle products,” Palandri says.
