The Straits Times
Published on Oct 26, 2012

NZ's Fonterra launches sale of $525m dairy fund


WELLINGTON (REUTERS) - New Zealand's Fonterra, the world's largest dairy processor, launched the sale of a NZ$525 million (S$ 525 million) fund offering investors exposure to the country's dairy industry, part of a scheme to free up cash as it expands into Asia.

Fonterra, which aims to compete with food giants Nestle and Danone, expects Asian demand for dairy products to far outstrip supply by 2020 and is setting up farms and dairies in China and building factories in Indonesia.

The new fund is part of wider plan to relieve pressure on Fonterra's balance sheet from farmers joining and leaving the co-operative and fluctuations in milk production, and ensures ownership of the industry remains with farmers.

Analysts said Fonterra's 21 percent share of global dairy exports, along with its exposure to the agricultural economy and Asian growth would be attractive to investors.