The company plans to transfer its B class shares from the National Stock Exchange (NSX) to the Australian Securities Exchange (ASX) to improve access to external capital.
If the ASX proposal is successful, SunRice’s board expects to raise about AU$20 to AU$30 million.
Currently, SunRice’s four main business goals are expanding low-GI and sushi rices into new markets, especially in Asia; growing its healthy snacks business; investing in a healthy food ingredients business; and, with more diverse sources of rice, to create a global supply chain to extend the protocols and standards that make SunRice a trusted brand.
Eye on Asia
SunRice’s low-GI rice has already been launched in some Asian countries with health issues associated with diabetes and obesity.
At the inaugural Healthy Ageing APAC Summit organised by FoodNavigator-Asia and NutraIngredients Asia recently, Kathy Usic, CEO of the Glycemic Index (GI) Foundation, cited SunRice Doongara Low-GI Rice as a successful Australian low-GI food product.
It is available in Hong Kong and Singapore under Kangaroo Brand, and is being targeted at other Asian countries.
Strategic partnerships between SunRice and Japanese food wholesalers are also opening up new value-added opportunities for its premium Australian short-grain varieties in Japan’s restaurant and sushi chain market.
To expand low-GI and sushi rice markets, investment is needed in agronomic packages for its Riverina growers to increase production, as well as to upgrade Australian facilities.
Presently, SunRice supplies almost 50 countries with a diverse range of rice food products. SunRice brands sold around the world include SunRice, Sunwhite, Sunlong, Trukai, Roots, Island Sun, Koala, Kangaroo, Double Ram and Hinode.
Healthy snacks and ingredients
Rob Gordon, SunRice CEO, said that in order to develop its healthy snacks business, the firm needed to accelerate new product development and innovation — either from within the business or through acquisition.
It also needs to boost global sales and marketing, invest in a processing facility, and create global supply chains for lower-cost snacks.
To capture opportunities for healthy food ingredients in the region, they need to “build a business around these products”, Gordon said.
“We need to invest in consumer-focused product R&D; building global partnerships and identifying potential acquisitions; creating quality-assured supply chains to deliver products to market; and facility investments in Australia and offshore,” he said.
Building a global supply chain
Lastly, Gordon said building a global supply chain will require investment in quality assurance and traceability systems.
A spokesman at SunRice further revealed to FoodNavigator-Asia that the firm is evaluating the acquisition of milling assets in Vietnam to support rice being grown for the company in the Mekong Delta, to provide an alternative source of quality Japonica rice.
“SunRice is now one of the country’s largest exporters, representing over 5% of total rice exports and almost 60% of Japonica exports,” said the spokesman.
“Through lifting rice growing and milling practices to Australian standards, SunRice is helping to improve the reputation of Vietnamese rice in world markets, while simultaneously improving farm-gate returns for our Vietnamese growers by an average of 30% above long-grain prices.”
In Vietnam, the firm already has “rice-growing, servicing and supply chain managing and research activities”. In the only other Asian country currently, Singapore, SunRice has an operation managing Asian supply sources and servicing Asian markets.
In the Middle East, SunRice has a packaging facility in Jordan and an operation in the United Arab Emirates (UAE) servicing Middle Eastern and African markets. According to the firm, it is number one in Japonica rice in the Middle East.
The plan
If approved by shareholders, the ASX listing will remove current B class share ownership restrictions and the 5% shareholding cap, and allow anyone to invest in SunRice B class shares, up to a new maximum 10% shareholding cap.
This will allow the company to take advantage of investor appetite for Australian-branded FMCG and agri-stocks, while retaining its dual class structure and A class grower shareholder control.
It is also intended to increase paddy price and shareholder returns.
The proposal will be decided by a shareholder vote at the SunRice annual general meeting on September 20. A 75% majority vote of A and B class shareholders is required for it to proceed.
According to Laurie Arthur, chairman of SunRice, five years ago, the company shifted its strategy from marketing its Riverina rice crop to servicing market demand for branded rice products. The business has since grown and, since 2013, turnover has exceeded AU$1bn.
Altogether, said Gordon, investment of AU$200m to AU$300m dollars is needed to execute the firm’s growth strategy. The ASX proposal and capital raise is a first but important step.