Paediatric supplements manufacturer Nutritional Growth Solutions will be looking to raise a minimum $6 million when it launches its initial public offering this week ahead of a planned ASX debut next month.
The Israel-based company aims to make a big impression in the global children’s nutritional supplements market which has been valued at $8.6 billion.
Nutritional Growth will offer up to 35 million shares at $0.20 each to raise up to $7 million and has a proposed listing date of the 26 October under the ticker NGS.
IPO proceeds will focus on the development of nutritional supplements for the three to 12-years of age consumer market in the US and other regions.
Approximately 90% of Nutritional Growth’s revenue is currently generated from North America through direct-to-customer (B2C) sales via online channels including its own website and third party e-commerce platforms such as Amazon.
The company is now setting its sights on expanding into China and other parts of Asia, where it will generate revenue using a network of distributors in product-relevant markets.
Nutritional Growth non-executive chairman Brian Leedman said the company would be well-placed to capture its target market, which has been traditionally overlooked by other manufacturers in favour of adults and infants.
“The sale of nutritional supplements has experienced tremendous growth in recent years, but most attention has been focused on adult users and children under three years of age,” he said.
“Three to 12-year old consumers represent a large market opportunity and [we are] highly differentiated from our competitors with clinically-tested products and an expanding product portfolio to capture this market opportunity.”
Nutritional Growth markets its products under different brands depending on country of sale – in Israel, for example, the company’s patented dairy shake mix is sold under the Pro Up brand; while in India, it sells in different territories under the Horlicks name developed by GlaxoSmithKline.
In the US, Nutritional Growth markets under the Healthy Height name, which originally grew out of clinical research on kids in the lowest height quartile conducted at Israel’s Schneider Children’s Medical Centre.
The two-phase, placebo-controlled study focused on 200 low-height-for-age children who consumed the product for 12 months.
After six months, the children who consumed at least half of the recommended daily intake of Healthy Height nutrition demonstrated noticeable increases in height and weight.
The study also showed the protein, vitamin and mineral-rich mix to be an effective and safe option for promoting height and weight in children without an increase in body mass index.
Mr Leedman said new clinical studies were underway to support the development of Healthy Height Junior Growth Formula for children older than 10 years, and Sports Formula to support the athletic performance of active kids.
In the 10 years to 2014, the use of nutritional supplements in the US market has increased from around 28% of children to 30%, with highest usage being recorded in the zero-to-five years group.
Increased awareness of the presence of sugar, corn syrup or other potentially harmful ingredients in these products has seen consumers progressively turn their focus to brands which are perceived as being more natural.
China is also growing its love of paediatric supplements, with market drivers such as increasing income levels, greater nutritional awareness, government programs to improve paediatric nutrition, and the growth of new distribution channels (such as cross-border e-commerce) enabling the trend.
Research has shown Chinese consumers remain cautious over the quality, safety and efficacy of domestically-made supplements, which is driving significant growth opportunities for imported products.
Countries such as the US and Australia are regarded particularly favourably by Chinese consumers.