Oceania Natural raises $3.5mn to set up Hong Kong office

Tuesday 19th July 2016

Oceania Natural, the food supplements maker which listed on the NXT at the end of March, has raised about $3.5 million from investors in a joint venture to establish a Hong Kong-based subsidiary.

The company, which produces food supplements derived from manuka honey and noni fruit juice, has raised about NZ $3.5 million (HK$19.5 million) from qualified Chinese and New Zealand investors, it said in a statement. The investors collectively hold 49 percent of the subsidiary, ONL Asia, while Oceania Natural will hold the majority stake.

"Many of these investors maintain exclusive distribution networks: for example, one investor has access to more than 2,000 pharmacies in China," Oceania Natural said. "Investor subscription and shareholders' agreements have been entered into, to secure this funding."

Oceania Natural also plans to establish its Chinese operational headquarters in Wuxi City, dependent on government approval. The office will be located in the city's central business district and will showcase Oceania Natural's product range, as well as allowing the company to grow its distribution network into new provinces in China, the company said.

The bulk of Oceania Natural's revenue comes from China, where it generated $2.8 million of sales in the latest year ended March 31, earning $704,006 after costs. In the New Zealand segment, revenue was $555,036 while after costs the segment delivered a loss of $450,298.

"We remain focused on growing our distribution networks and increasing supplier partnerships," chief executive Walker Zhong said. "It is encouraging to have reached an arrangement enabling us to fast-track our distribution networks without needing to ask our shareholders for funding."

The deal will allow the company to expand more quickly and get in a stronger position with its distribution and supplier networks ahead of the second half of the financial year, when sales are traditionally stronger due to celebrations around Christmas, New Year, Chinese New Year and Valentine’s Day, Zhong said.

The company is still in discussion with a potential South Korean distribution partner and with New Zealand honey suppliers, it said.

The shares last traded at $2.45 and have nearly quadrupled from the 64 cents per share price they listed at earlier this year.

BusinessDesk.co.nz

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