Fonterra has launched a fund worth at least NZ$500m ($420m) on the New Zealand and Australian stock markets – offering non-farmers the opportunity to invest in Fonterra for the first time.
Shares in the New Zealand-based dairy processor are not on offer through the launch. But through the fund, interested investors will be able to buy fund units for between NZ$4.60 and NZ$5.50 with the prospect of dividends.
Returns will be based on Fonterra’s dividends, which reflect global dairy prices and the performance of the firm’s consumer business.
Fonterra has forecasted a dividend for the 2013 financial year of 32 cents per share.
According to Fonterra chairman, Sir Henry van der Heyden, the launch will provide Fonterra with permanent capital, while preserving farmer control of the co-operative.
“This will provide permanent capital for Fonterra and reduce redemption risk, while preserving 100% farmer control and ownership of the Co-operative,” said van der Heyden.
“It is a historic day for the Co-operative. The Fund provides a unique opportunity for the public to gain exposure to the financial performance of Fonterra and the global dairy industry.”
Commenting on the announcement, Fonterra CEO Theo Spierings called the fund “a unique investment opportunity.”
“In New Zealand in the 2011/2012 dairy season, we collected approximately 17bn litres of milk – and more than 2bn litres overseas,” said Spierings.
“Fonterra builds on earnings from New Zealand and internationally-sourced milk through integrated regional businesses which focus on branded consumer dairy products, and out-of-home foodservices. Our regional business achieved sales of around $6bn across a diverse range of geographies and product formats in the last financial year.”
Emerging market expansion
It is thought that the cash pool created by the fund will be used to finance Fonterra’s continued expansion into the emerging Asian market.
According to Spierings, Fonterra is well positioned to meet rising global dairy demand.
“Fonterra is well placed to meet rising global demand for dairy, with 72% of our NZ Milk Products’ sales volumes and 46% of our regional business revenues coming from emerging market regions in the last financial year,” said Spierings.