WELLINGTON, June 24 New Zealand dairy company
Synlait Milk Ltd plans to raise a total of NZ$120 million
($92.79 million) in an initial public offering and share
sell-down, ending the majority stake held China's Bright Dairy.
The milk powder processor owned by Shanghai-based Bright
, Japan's Mitsui & Co. and Synlait Ltd, a
private local company, said it was seeking to raise NZ$75
million in fresh capital. Mitsui and Synlait Ltd will offer a
further NZ$45 million to pay down debts and expand operations.
Bright, which has held a 51 percent stake in the firm since
2010, will not take part in the sell down, Synlait Milk said in
a statement. It added that a dilution in Bright's shareholding
would lower its stake to around 40 percent of the company.
Synlait Milk competes with Fonterra, the world's
largest dairy exporter, to produce New Zealand-made milk powder
to ship overseas for use in products ranging from milk formula
to cheese to feed a growing middle class in emerging countries.
It is one of several small New Zealand companies operating
in China's $12.4 billion milk formula market which has grown
12-fold since 2002 as more mothers join the workforce and spend
less time breastfeeding.
The company, which exports all of its product, has said it
hopes China will eventually account for one-third of its overall
revenue. New Zealand supplied 90 percent of the nearly $2
billion worth of milk powder China imported last year.
Synlait Milk set a price range for the offer of
NZ$2.05-NZ$2.65 per share, giving the company a market
capitalisation of NZ$305 million-NZ$372 million.
Given growing interest in investing in New Zealand's dairy
industry, market participants said they anticipated solid demand
for the issue despite a stumble in the country's share prices,
which have retreated 6 percent from a lifetime high hit in May.
But some questioned whether many offshore investors would be
attracted to the issue, given its limited size.
"There might be some offshore interest, but it will probably
be the more smaller, opportunistic players," said a New Zealand
fund manager who declined to be named.
"It will be hard for global investors to gain a material
In the offer jointly lead managed by First NZ Capital
Securities Limited and Goldman Sachs New Zealand Limited,
shares will be priced on July 9 following a book build, and
will close on July 19.
Synlait Milk said it planned to use the new funding to pay
down debts, build a new milk powder dryer and a blending and
packaging plant at its headquarters outside Christchurch, while
it also plans to enlarge its storage facilities.
It aims to control as much as the milk formula manufacturing
and packaging process as it can, as products made and packaged
by foreign companies outside China demand hefty premiums at
supermarkets in China, where food safety scandals are rife.
The IPO and offer comes as Fonterra plans to introduce its
branded milk formula products in China later this year, while
Chinese dairy heavyweights Inner Mongolia Yili Industrial Group
and Yashili International Holdings plan to
build their own milk formula processing plants in New Zealand.
Earlier this month, China Mengniu Dairy Co Ltd,
the country's largest dairy company, signed a takeover deal to
($1 = 1.2932 New Zealand dollars)
(Reporting by Naomi Tajitsu; Editing by Jeremy Laurence)