Fonterra raises $230 mln in dim sum bond to fund Beingmate investment

Tuesday 16th June 2015

Fonterra Cooperative Group, the world's largest dairy exporter, sold its third dim sum bond, raising 1 billion Chinese yuan, or $230 million, with the proceeds helping fund the stake in Beingmate Baby & Child Food.

The five-year bond, which is priced in yuan but issued outside of China to tap international investors, will carry a 4 percent coupon, the Auckland-based company said. The cash will be partially used to fund Fonterra's 20 percent stake in the Chinese infant formula maker, worth $615 million when the dairy company bought in and now valued at 3.67 billion yuan ($846 million).

Strong demand for the issue saw Fonterra get the deal done quickly and at a cheaper price than the original coupon which was set to be 4.125 percent, a source close to the offer told BusinessDesk.

This is the third dim sum bond Fonterra has issued. The first was a 300 million yuan three-year bond sold in 2011, and Fonterra raised 1.25 billion yuan, approximately $250 million, selling five-year debt in January 2014.

In April, the dairy giant raised $350 million from a six-year kiwi bond offer, which pays annual interest of 4.33 percent and trades on the NZX debt market. It said at the time it attracted $100 million in over-subscriptions.

HSBC Bank, which managed its other dim sum issues, was the global coordinator for the issue and joint book runner with Mizuho Bank and Societe Generale.

BusinessDesk.co.nz

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