Fonterra's $500 million share market offer has attracted
strong investor interest, requiring brokers to heavily scale
back investor applications for units in the fund, market
The so called book-build for brokers and others connected to
the co-operative opened on Monday and closes on November 21.
"The scaling has been pretty severe and I understand the
retail bids were well in excess of $1 billion," said one
One investor said he had put in an application with his
broker for $200,000 worth of units, only to have it scaled
back to just over $10,000.
The first phase of Fonterra's Trading Among Farmer's share
trading scheme started on Friday, when it started to gauge at
what level farmers would be prepared to sell economic rights
to their shares.
The rights will go into the Fonterra Shareholders Fund, which
the investing public will be able to gain access to, and
which is expected to be worth not less than $500 million.
An institutional book-build will take place on November 26
and 27. Pricing and allocations will be announced on November
27 and the units are expected to start trading on the ASX and
NZX on November 30.
The units will form an integral part of Fonterra's Trading
Among Farmers (TAF) share trading scheme, which is aimed at
offsetting so-called redemption risk and at giving farmers
increased financial flexibility.
As it stands, Fonterra has to buy farmers' shares when they
choose to exit the industry, which exposes the co-operative
when a large number of them choose to sell at the same time.