Extruded yellow pea dough, called “beads,” are pneumatically transported from a dryer at an AGT Foods processing facility in Regina.Michael Bell/The Globe and Mail
AGT Food and Ingredients Inc. AGTF-T had a disappointing debut in its second foray as a public company after the Regina-based agrifood company controlled by Fairfax Financial Holdings Ltd. FFH-T raised $450-million in an initial public offering.
AGT stock closed Tuesday at $21.25, down 7.6 per cent from its issue price of $23 a share. That price had already been cut from an initial range of $26 to $30 a share that the underwriting group had marketed to investors in recent weeks.
The initial public offering – co-led by National Bank Financial Inc., and Bank of Nova Scotia – was launched on a tumultuous day as global stock markets fell, including the S&P/TSX Composite Index.
AGT was also vulnerable to the geopolitical instability that erupted across the Middle East, which accounts for 18 per cent of the global food processor’s sales. AGT has 39 facilities across five continents, including 16 in Canada.
The IPO will generate $449.5-million in gross proceeds, with $23.6-million of that paid to the deal’s underwriters.
“The company has been very profitable and we had a desire to make sure that the balance sheet was righted for future growth,” chief executive officer Murad Al-Katib said.
Alongside the IPO the company also raised $200-million in a private placement transaction with Toronto-based insurance giant Fairfax.
The company is majority owned by Fairfax which will control 52 per cent of total issued shares and outstanding common shares from the IPO. A small amount will still be held by Mr. Al-Katib and executive vice-chairman and co-founder Hüseyin Arslan.
The $625-million in net proceeds from the IPO and Fairfax will be used to pay down much of the company’s $973-million in long-term debt, which Mr. Al Katib said will drive $70-million annual cash flow improvement.
AGT, founded by Mr. Al-Katib in 2001, has net revenue of $3.2-billion and sells staple products including pulses and pasta to 127 countries.
In regulatory filings related to the IPO, the company said it expected that revenues, operating earnings and cash flow in the fourth quarter would all be lower than the comparable period a year earlier. Revenue for the final three months of 2025 is expected to come in at $815-million to $830-million, compared to $1.04-billion for the same period a year earlier. Adjusted operating earnings for the last three months of 2025 is expected to be in the range of $53-million to $58-million, compared to $58.1-million for the same period last year.
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AGT first went public in 2009, and was taken private a decade later by a group led by Mr. Al-Katib, Fairfax and Point North Capital Inc. in a $436-million deal.
In the last six years the company has tripled its annual adjusted operating earnings to $190-million, Mr. Al-Katib, said, adding that this was an “extraordinary transformation” given an onslaught of global challenges such as war in the Middle East, devaluation of African currencies, hyperinflation in Turkey and a global trade war ignited by U.S. President Donald Trump.
“We’re strong believers that low leverage, free cash flow businesses that are profitable become valuable … We thought it was time to go back to the public market and list the company again and continue on our journey.”
There has been a flurry of movement by Canadian companies to list on North American markets in the last few weeks, including General Fusion Inc., Xanadu Quantum Technologies Inc. and Barrick Mining Corp., which in February said it would list North American gold assets. In mid-February, Toronto Stock Exchange operator TMX’s chief executive, John McKenzie, said the IPO pipeline in Canada remains strong with about 1,600 companies at varying stages of preparing to list.
With reports from Tim Kiladze and Andy Willis