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Fonterra has declined to comment on a report it is talking to China Investment Corp about participation in the upcoming Fonterra Shareholders Fund, other than to say that it was talking to a large number of institutions.
A Wall Street Journal report out of Beijing said CIC, a huge sovereign investment fund, was seeking a stake in the Fonterra Shareholders Fund and that it was in talks Fonterra with regards to taking a stake.
The Journal said CIC's overseas investments were linked to China's growth prospects.
In a statement, the dairy giant said the Fonterra Shareholders' Fund offer was being made to institutional investors in New Zealand, Australia, and certain other overseas jurisdictions in Asia and Europe.
The issue's joint lead managers are undertaking a "bookbuild" by inviting selected institutional investors and NZX firms to indicate the number of units they wish to apply for at a range of prices, Fonterra said.
"Fonterra and the joint lead managers have spoken with a large number of institutional investors, as would be expected for an offer like this," Fonterra said.
"These meetings are confidential. However, until the bookbuild process has been completed, it is impossible to know what any institution's ultimate intention might be," the statement said.
One New Zealand fund manager said it was highly likely that CIC would be on Fonterra's list of approved investors.
The cooperative is in the throes of getting its Trading Among Farmers (TAF) share trading scheme under way.
TAF will involve creating the shareholders' fund, which will allow non-farm investors access to the cooperative's dividend flow but will not allow fund investors to gain voting rights.
The fund, which is expected to be worth not less than $500 million, has already attracted heavy investor interest, and brokers have had to severely curtail their clients' applications for units.
Fonterra's offer documents say that no entity, other than Fonterra, can hold more than 15 per cent of the units on issue but it is not yet clear what the ownership split between individuals, institutions and "Friends of Fonterra" - former dairy farmers and sharemilkers - will look like upon completion of the offer.
Local investors are already disappointed that they have been unable to secure the Fonterra units that they applied for due the intense demand for the issue.
Share brokers have been tight-lipped about the bookbuilding process before the fund's expected listing on November 30.
"From what I can gather, the company is well in control of what is going on," said one fund manager.
"They are very keen to get a good, clean listing."
CIC has several large investments in some big names around the world. It has a 9.4 per cent stake in Blackstone, a major investment and advisory firm and a 9.9 per cent stake in financial services firm Morgan Stanley.
On November 1, CIC acquired a 10 per cent stake of Heathrow Airport and in January, it bought an 8.68 per cent stake in the British water and sewerage company, Thames Water.
"The mission of CIC is to make long-term investments that maximise risk-adjusted financial returns for the benefit of its shareholder," the Beijing-based company's website says.
CIC does not normally take a controlling role or seek to influence operations in the companies in which it invests.
"CIC's fundamental approach is to hold, manage, and invest its mandated assets to maximise shareholder's value," it says.