January 22, 2014
Fonterra raises US$207 million to support China's growth
As part of its on-going commitment to developing its China business, Fonterra Co-operative Group Limited has raised RMB1.25 billion (US$207 million) through a five-year "dim sum" bond issue (Chinese renminbi bond raised offshore).
Fonterra Chief Financial Officer, Lukas Paravicini, said the funds raised from the dim sum bond issue will be used to further strengthen and support the growth of Fonterra's businesses in China.
"Along with refinancing some of our existing China operations, we will also be using funds to support further growth in this market. This will include the further expansion of our consumer, foodservice and farming operations," he said.
Fonterra President Greater China & India, Kelvin Wickham, said the co-operative has had a strong focus on driving growth in both volume and value as it develops its integrated business model in China.
"Last year we successfully launched our premium milk brand, Anchor, and also launched a new paediatric formula product specially tailored for the China market under the Anmum brand. The renminbi bond issue will support the growth of our whole business, and in particular our consumer brands business which is a key focus for growth given it is at an earlier stage of development," Wickham said.
Paravicini added that the decision to issue the dim sum bonds is part of Fonterra Treasury's diversified funding strategy. This comprises a combination of bank facilities and debt capital market bonds, which currently includes bonds denominated in New Zealand Dollars, Australian Dollars, US Dollars, Renminbiand Sterling.
He said that the dim sum bond market has continued to develop strongly over recent years and provides an attractive opportunity for them to raise long term renminbi funding that matches their businesses in China. As this funding market and their business in China develop further, it makes sense to seek a greater alignment between their treasury borrowing and their business activities.
This is the second time Fonterra has issued bonds denominated in Chinese renminbi. The first time was in 2011 when it became the first Australasian company to tap the dim sum market.
The farmer-owned New Zealand co-operative is the largest processor of milk in the world, producing more than two million tonnes of dairy ingredients, value added dairy ingredients, specialty ingredients and consumer products every year.
