Northern Ireland chicken processor Moy Park could be set for a partial flotation (IPO) before the end of this year.

Moy Park, owned by the Brazilian Marfrig Group, is one of the UK’s leading providers of poultry and convenience food products to the UK, Ireland and Europe.

With €1.5bn in sales, Moy Park accounts for 25% of Marfrig’s total revenue.

The news came when Marfrig CEO Sergio Rial said they are looking at the possibility of selling stakes in two of its subsidiaries, Northern Ireland based Moy Park and US-based Keystone Foods, through an IPO. The main purpose of this is to reduce the high level of debt, which stands at €2.3bn.

Sergio Rial said Marfrig was “exploring the possibility of listing one, both or none” (of the companies) because it sees strong market dynamics in London and New York.

With a renewed level of investor confidence, IPOs have become a real option again for companies such as Marfrig to raise finance.

The purpose of the listing is two-fold, according to Rial. Firstly it would accelerate the company’s growth strategy in the UK while also taking on the European challenge and opportunity. The second component would accelerate the deleveraging of the Marfrig group.

Last year, Marfrig group revenue was R$18.7bn (€6bn) down from R$23.7bn (€7.6bn) in 2012. This reduction was largely due to the sale of Seara Foods to JBS. Earnings (EBITDA) fell from R$2.1bn (€670m) in 2012 to R$1.4bn (€447m) last year.

Total group margins were 7.7% last year with their Brazilian beef business driving performance with a 9.2% margin. This is substantially better than its Moy Park and US-based Keystone divisions. Despite increased margins in the fourth quarter, the Moy Park division recorded annual margins of 6.5%.

Marfrig’s net debt improved slightly, from R$9.2bn (€2.9bn) at year-end 2012 to R$7.1bn (€2.3bn) at year-end 2013. However, the Net Debt: EBITDA ratio increased to 4.9 times at year end. Even though the net debt decreased almost a quarter, the debt ratio increased because of reduced earnings.

Since Marfrig became a listed company in 2007, it has made dozens of acquisitions and increased its debt drastically. For example, Marfrig bought Moy Park from OSI Group in 2008 for £350m.

In the last year, Marfrig has made steps to restructure. In June 2013, it announced the sale of its Seara Brazil and Zenda businesses for €1.9bn to rival JBS. This rebalanced the capital structure of Marfrig, and refocused it on its core beef business.

With the company set for reducing its debt ratios to 2.5 times by 2018, it seems likely that part of Moy Park could be placed on the London stock exchange by the end of this year.

A Moy Park spokesperson told the Irish Farmers Journal: “As part of ongoing work to support our growth strategy, Marfrig has stated that it is exploring the possibility of taking Moy Park and Keystone Foods public. Although still at an exploratory stage, this has the potential to create positive opportunities for Moy Park.”

The news does not appear to be a threat for the Moy Park business, as any reduction in debt will allow the company to expand into new markets.

Moy Park said: “Should Marfrig progress with an IPO, the company will maintain a comfortable majority control and will be able to inject additional capital to support more rapid organic growth in Europe and Asia – including the Moy Park business.”

Moy Park profile

Moy Park employs over 12,000 people across 16 sites in Ireland, the UK, France and Holland. It also supplies 25% of the parent stock for the broiler chicken sector in Europe and Saudi Arabia.

Moy Park grows and processes over 4.5 million chickens per week, 2m in Northern Ireland and 2.5m in England. Its convenience division manufactures 20,000t per month of coated and ready-to-eat products. The company supplies own-label and branded chicken to retailers and food service businesses.

It recently appointed an international sales team to drive growth in European and International markets such as South Africa and Russia. In 2012, Moy Park gained access to Russia, India and Canada.

The company has invested almost €500m in capital expenditure programmes over the last decade. In 2010, the company took over O’Kane Poultry in Co Antrim. It subsequently upgraded the Ballymena factory.

Moy Park celebrated 70 years in business last year. After a management buyout in 1984, the company expanded rapidly. In 1991 it formed a joint venture in France with Bourgoin, of which it later acquired full ownership (1998). Subsequently the company became part of the Chicago-based OSI group. In 2008, Marfrig completed the acquisition of Moy Park in Europe as part of an exchange of businesses with OSI.

In 2012, Jamie Oliver and Moy Park came together to produce a range of ready-to-cook chicken products.

Last year, as part of its parent company’s restructuring, Moy Park took responsibility for Marfrig’s operations in Europe. Moy Park and Marfrig are official sponsors of this year’s FIFA World Cup.