PurePastures Dairy Business Plan — Executive Summary

PurePastures Dairy (Pty) Ltd is a premium South African dairy processing and distribution business positioned to capture the structural shift away from commoditised milk toward high-value, health-oriented and traceable dairy. Operating an integrated farm-to-shelf value chain, pasture-aligned milk sourcing, advanced processing, and cold-chain distribution, the Company serves retail, food-service, private-label and export channels across South Africa and the wider Southern African Development Community (SADC).

The Company is raising R210 million of growth capital (60% senior secured debt / 40% new equity) to fund plant automation, cold-chain expansion, solar self-generation, phase-2 regional nodes in Cape Town and Durban, and a working-capital build to support volume and export growth. On the sponsor operating case, revenue grows at 12% per annum from R500m in FY2026 to R786m by FY2030, with EBITDA margin expanding from 18% to 22% as the premium and value-added mix deepens.

Figure 1.1 *Revenue trajectory and compound growth, FY2026–FY2030*

Investment highlights

Defensive, non-cyclical demand: dairy is a household staple with resilient at-home consumption even under consumer-spending pressure.
Premiumisation tailwind: value-added and functional dairy is growing materially faster than commoditised milk, commanding 35–45% gross margins versus 15–20% for private label.
Structural supply consolidation: the number of commercial milk producers has fallen roughly 78% since 2000, rewarding processors with secure, contracted supply and scale.
Under-served SADC export corridors: Botswana, Namibia, Zambia and Mozambique offer a high-growth, margin-accretive regional runway.
ESG-aligned cost structure: solar self-generation insulates the plant against tariff volatility and load-shedding while supporting the sustainability narrative that premium retail buyers increasingly demand.

The independent analytical view

This plan preserves the sponsor’s revenue and EBITDA but re-underwrites the earnings below EBITDA on a fully-loaded basis. Once componentised depreciation (R28m–R41m per annum), cash interest on the R130m senior facility, and 27% corporate income tax are applied, re-underwritten net profit is R37m in FY2026 rising to R95m by FY2030 — materially below the sponsor’s illustrative R65m–R110m. Crucially, this more conservative earnings profile is still comfortably bankable: debt-service coverage never falls below 1.83x

Key findingHeadline net profit is overstated; the coverage story is nonetheless strong

The sponsor’s illustrative net profit of R65m–R110m implies almost no depreciation or interest, an implausibly light charge for a capital-intensive dairy processor carrying R235m of net property, plant and equipment and R130m of senior debt.

Re-underwritten on a fully-loaded basis, net profit is roughly 30–44% lower in the early years, converging as the term loan amortises. Importantly, this does not undermine bankability: minimum DSCR of 1.83x and a de-gearing to a net-cash position by FY2029 make the credit robust. Investors should underwrite to the re-derived figures, not the headline.

Figure 1.2 *Sponsor illustrative vs. analyst re-underwritten net profit*

Returns summary

New equity of R80m acquires an estimated 13.3% stake at a 6.6x entry EV/EBITDA. On a five-year hold to FY2030 and a 7.0x exit multiple, the base case delivers an equity IRR of approximately 18% and a 2.3x money multiple. On a conservative flat-multiple exit (no re-rating), the IRR is still approximately 17%,a return driven by earnings growth and de-gearing rather than multiple expansion.

R million	FY2026	FY2027	FY2028	FY2029	FY2030
Revenue	R500	R560	R627	R702	R786
EBITDA	R90	R106	R125	R147	R173
EBITDA margin	18%	19%	20%	21%	22%
Net profit (re-underwritten)	R37	R47	R59	R75	R95
DSCR	1.83x	2.32x	2.94x	3.72x	4.75x
Net debt / (net cash)	R70	R62	R37	(R11)	(R75)

Table 1.1 Headline financial summary (re-underwritten basis).

Transaction overview

Item	Terms
Instrument	Senior secured debt + primary equity
Total capital sought	R210m (R130m debt / R80m equity)
Use of proceeds	Automation, cold chain, solar, phase-2 nodes, working capital
Indicative equity offered	~13.3% for R80m
Entry valuation	~6.6x EV/EBITDA (R520m pre-money)
Base-case equity return	~18% IRR / 2.3x MOIC (5-yr)
Senior debt terms	7-yr, 12.5%, DSCR ≥ 1.50x, R15m DSRA
Minimum DSCR (modelled)	1.83x

Table 1.2 Indicative transaction overview.