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Fonterra exposure appeals to AMP Capital Investors

Tuesday 20th April 2010

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AMP Capital Investors, which manages some $11 billion worth of assets in New Zealand, would welcome the opportunity to invest in a fund with direct exposure to Fonterra Cooperative Group.  

The world’s largest dairy exporter is pitching to open up investment in a proposed Fonterra Shareholders Fund, in which farmers could trade so-called dry shares among themselves, to institutional and public investors, much like a unit trust. When asked if AMP Capital Investors would be interested by such a vehicle, head of equities Guy Elliffe welcomed the opportunity.  

“Absolutely – it’s a global scale business – we’re quite constructive about the overall look in the agricultural sector,” Elliffe told a media briefing in Wellington. “Fonterra seems to be a nice play on New Zealand’s agricultural resource – it’s a good scale asset – we’d definitely be interested.” 

Fonterra announced the proposal earlier this month when it put forward the third phase of its capital restructuring, and was at pains to stress that any outside investment would not hold voting rights, and that it wouldn’t be a direct investment in the dairy exporter. The fund would only offer limited exposure to Fonterra’s performance, being tied only to the value-added dividend component.  

AMP’s Elliffe said Fonterra’s existing structure was unusual in that it didn’t have the “flexibility to access capital when you need to. It’s a strange situation where, when things are going well there’s a lot of capital, and when things aren’t going well, there’s not a lot of capital, so it’s the wrong way round.” 

Ultimately, it would be up to the farmers to decide whether or not to allow a change in the company’s structure, Elliffe said.  

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