Kiwis may get second shot to invest in Synlait

Synlait's Canterbury dairy factory. Photo / Simon Baker

Kiwi investors who spurned the chance to buy shares in Synlait's milk processing unit last year may get another shot at buying into the business, with its new Chinese partner supportive of a float in the next five years.

China's Bright Dairy & Food, which has agreed to buy a majority shareholding in Synlait's milk processing vehicle Synlait Milk Ltd. for $82 million, supports the New Zealand's company's plan of listing within three to five years of the joint venture, it said in a statement to the Shanghai Stock Exchange.

If Synlait Milk lists, Bright Dairy will be entitled to subscribe to new shares to keep its 51 per cent holding, which the Chinese company said is a long-term investment.

Synlait, which abandoned a $150 million share sale to list on the NZX last year due to a soft response from investors, is seeking funds to build a second drier at its main site to help boost its milk powder capacity.

The Bright Dairy deal is hot on the heels of Hong Kong-listed Natural Dairy (NZ) Holdings' bid to buy up $1.5 billion of land and facilities, including the Crafar family farms, to capitalise on New Zealand's reputation of producing premium quality dairy products.

Bright Dairy will hold a shareholders' meeting next month to discuss the deal, which is subject to regulatory approval from the Overseas Investment Office.

The Chinese company is a subsidiary of Bright Food Group, the biggest food company in Shanghai. Earlier this month Bright Food unsuccessfully tried to buy CSR Ltd.'s Australian sugar unit.