Brisbane Markets clears "pathway" for ASX listing

More than two decades after the Brisbane Markets site in Rocklea was privatised for $74 million, its owners have struck a tentative deal to remove a separate class of 'industry' shares so that an ASX listing is possible.

According to predominantly industry-owned Brisbane Market Limited's (BML) most recent half-yearly report, the company has more than $259 million in total equity and $512 million in assets, mostly accounted for by the value of its investment properties.

BML also has a 44.33 per cent shareholding in Perth Markets Group Limited (PMGL), having tried to secure a majority stake of up to 65 per cent recently that was met with push-back from West Australian industry owners over perceived illiquidity for the remaining 35 per cent of shares had they accepted the takeover. 

But it is the shareholder structure on its home turf that has been a key sticking point for BML, which lists the Queensland Chamber of Fruit and Vegetable Industries Co-operative Limited as a substantial shareholder as well as other representatives throughout the supply chain from growers and retailers to wholesale industry organisation Brismark.

When BML purchased the Brisbane Markets from the Queensland Government in 2002, there was a provision in the constitution for separate industry shares that allowed holders to appoint a director to the board.

"BML was established as a fruit and vegetable industry-based company, and the provision for the existence of the industry shares was intended to allow for the various sectors of the fresh produce industry (growers, wholesalers and retailers) to invest in BML and have representation on the board of BML," said Kelly, who was president of Brismark at the time of the acquisition.

"There were also a number of other provisions included in BML’s constitution which effectively give the holders of the industry shares a right of veto of any resolution considered by BML’s shareholders at a general meeting."

He explained that Brismark - formerly known as Landacq Limited - retains the four industry shares and continues to appoint four directors to the BML board; currently three independent directors and one nominee director from the Brismark board.

"Having this requirement does however bring with it limitations in respect of some of the potential options for the strategic direction of BML, including, for example, considering the option of listing on the ASX. The existing share structure of BML presents a barrier to BML meeting the requirements for admission to the ASX," he said.

This prompted negotiations between BML and Brismark that have taken two years, during a period that not only included damages and recovery from the Brisbane floods but also significant infrastructure investments in warehousing capability and a new carpark.

Kelly said the parties had agreed to terms, subject to shareholder approval, which create a "pathway for the possibility of BML listing on ASX at some point in the future".

"This historic agreement will create options for the next stage of growth of each organisation following the successful Brismark-led acquisition of the Brisbane Markets site by BML just over twenty years ago," Kelly said.

A transition deed has been executed that would both cancel the four industry shares, and also issue ordinary shares based on their value at the time the board resolves to proceed with a listing.

"Over the coming months, BML and Brismark will each engage with their respective shareholders and members, providing full details of the terms of the arrangement and seeking the required shareholder and member approval of this arrangement," Kelly said.

"Having this option is seen by the BML board, if supported by BML’s shareholders, as creating a significant opportunity for future growth as a specialised fresh produce market, warehousing and distribution facility. While there is no current intention to pursue an ASX listing in the near future, having the ability to do so does provide flexibility to the BML Board in its future deliberations."

BML's operating profit dropped slightly by 6.4 per cent in the December half year-on-year to $7.9 million, but a $14 million revaluation cut to its property led to a net loss after tax of $4 million, compared to a $26.7 million profit in the December half of 2021.

In FY22 the company's operating revenue was steady at $46.3 million. Net profit more than tripled to $62.3 million, due mainly to increases in property values for BML's Brisbane and Perth sites, significantly offsetting any statutory impact from $3.5 million in flood-related expenditures in Brisbane.