Fonterra Co-operative Group Limited announced today it has raised 1.25 billion Chinese renminbi (approximately NZD250 million) through a 5 year “dim sum” bond issue (Chinese renminbi raised offshore) as part of its ongoing commitment to developing its China business.
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.
“At the same time China is expected to see a continued gap between the demand and supply of raw milk so our farming business will continue to build supplies of quality raw milk to meet local consumer demand.
“Our well-established foodservices and ingredients businesses, which import quality products from New Zealand, are also expecting to see continued growth in the coming years.
“The renminbi bond issue will support the growth of our whole business, and in particular our consumer brands business which are a key focus for growth given it is at an earlier stage of development,” Mr Wickham said.
Mr 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, Renminbi and Sterling.
“The dim sum bond market has continued to develop strongly over recent years and provides an attractive opprotunity for us to raise long term renminbi funding that matches our businesses in China. As this funding market and our business in China develop further, it makes sense to seek a greater alignment between our treasury borrowing and our business activities,” Mr Paravicini said.
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.