Fonterra mum on China Govt share buy report

Fonterra won't say if it's talking with the Chinese government about one of its investment arms buying a stake in its new Shareholders Fund. Photo / Mark Mitchell

Fonterra said it had been talking with a large number of institutional investors about its upcoming Fonterra Shareholders Fund offer but that it was impossible to know what their intentions might be until the bookbuild process for the offer was complete.

The cooperative earlier declined to comment on a report out of Beijing that China Investment Corp was seeking a stake in the Fonterra Shareholders Fund.

The Wall Street Journal said China Investment Corp was in talks with Fonterra about investing in the fund. The Journal said the Chinese sovereign-wealth fund sought overseas investments tied to China's growth prospects.

In a statement, Fonterra said Fonterra Shareholders' Fund institutional offer is being made to institutional investors in New Zealand, Australia, and certain other overseas jurisdictions in Asia and Europe.

As detailed in the prospectus, the joint lead managers would undertake a bookbuild by inviting selected institutional investors and NZX firms to indicate the number of units they wish to apply for at a range of prices, Fonterra said.

"Fonterra and the joint lead managers have spoken with a large number of institutional investors, as would be expected for an offer like this,'' Fonterra said. "These meetings are confidential."

"However, until the bookbuild process has been completed, it is impossible to know what any institution's ultimate intention might be," the statement said.

The cooperative is still in the throes of getting its Trading Among Farmers (TAF) share trading scheme under way.

TAF will involve creating a shareholders' fund, which will allow non-farm investors access to the cooperative's dividend flow but will not allow fund investors to gain voting rights.

The fund, which is expected to be worth not less than $500 million, has already attracted heavy investor interest, and brokers have had to severely curtail their clients' applications for units.

Fonterra expects the fund to list on the ASX and NZX on November 30. Fonterra's offer documents say that no entity, other than Fonterra, can hold more than 15 per cent of the units on issue.

See part of the WSJ report here. (Full story behind paywall)