Investors will get their first exposure to the New Zealand dairy industry after an announcment yesterday that Canterbury dairy farmer and processor Synlait Milk plans a public share float to raise between $150 million and $170 million.
The company, 22% owned by Japanese Mitsui corporation, signalled expansion plans when it commissioned its first milk drier at its Dunsandel factory earlier this year and said yesterday the float and listing on the New Zealand Stock Exchange would fund construction of a second drier, believed to cost between $150 million and $170 million.
It would double annual production to 550 million litres.
Craigs Investment Partners broker Chris Timms said while he was yet to see details of the offer, he believed it would be attractive to investors.
"To get into a processor like that, I suspect there would be quite a bit of interest."
Dairying was a growth industry, and while it could be volatile, global demand for protein was growing.
Synlait was initially created to be a self-contained business entity with milk supplied by its own farms to maintain control over production, processing, marketing and distribution and to guarantee food safety, security and traceability.
"In this way, Synlait will be New Zealand's first genuine cow-to-customer dairy export company," the company said on its website.
While the company was not revealing its plans until the release of its prospectus later this month, sources say the float signalled a major change in direction, with milk likely to be accepted from suppliers outside the company.
Synlait appears to operate its own share register on its website to provide liquidity for current shareholders.
This month, those shares were valued at between $1.75 and $1.80.
A year ago they were valued at between $2.25 and $2.45.
It was not known if Synlait's cornerstone shareholder, Mitsui, would extend its holding.
The public share offer comprised three parts: To institutional investors in New Zealand, Australia and selected jurisdictions, clients of New Zealand Stock Exchange firms, and suppliers and staff of Synlait.
