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Fonterra spreads $525m fund to beat disclosure rules

No single investor owns more than 5% of units in the $525 million Fonterra investment fund – which means investors do not have to be publicly disclosed.

Under the Securities Markets Act and Financial Markets Authority rules, any holding over 5% has to be disclosed.

Fonterra chief financial officer Jonathan Mason told NBR ONLINE he does not believe any single unit-holder has more than 5%.

"That would have to be disclosed."

Fonterra revealed yesterday it has set its unit price at $5.50, at the top of the range in its prospectus.

Mr Mason would not confirm whether China's sovereign wealth fund, the $US400 billion China Investment Corp, had invested.

"We really don't want to confirm specifics," he says.

In terms of releasing information about which companies had invested, Mr Mason says: "We won't unless we have to."

Given trading of the units is scheduled to begin on the NZX and ASX on Friday, large unit-holders may have the opportunity to increase their holding and some may breach the 5% threshold.

Fonterra's policy is for no single investor to hold a total of more than 15% of units.

While Mr Mason would not give a breakdown of its $525 million fund last night, the Australian Financial Review disclosed institutions were allocated about $300 million of stock, $125 million went to the broker firm offer and $75 million to so-called friends of Fonterra.

Being closer to trading of units and "getting permanent capital" was a big step forward, Mr Mason says.

dwilliams@nbr.co.nz

More by David Williams

Comments and questions

A huge stinking rat. I bet John Key has shares, along with all his Cabinet.

You could have shares too if you had applied. Goodness knows why are you so negative. Who cares if JK and the National cabinet has shares. In fact, who gives a toss about your negative thoughts. You are probably the type of person who, when given $99, want to know why it was not $100.

No Dos - you're absolutely wrong! Kiwis just couldn't get the shares. I applied for $150k's worth and got nothing. Fonterra wold rather sell to foreigners than Kiwis. No wonder every Kiwi sees rental properties as a good investment.

No, no. John Key owns shares in Dairy Investment Fund, the investors in Open Country and a bulk cheese processor. He wants a competitive milk price for processors....

What a completely dopey comment to make with no supporting evidence, not that it matters who owns them.

That sums up Labour supporters quite well, dopey!

Exactly !

Glad to see Fonterra is adept at "milking" the financial system just a little bit more while just staying inside the loopholes provided.

Rules are not loopholes. Share floats have little to do with 'the financial system'. Nothing has been 'milked'. I'm not surprised you post as anonymous.

Hard to beat a rational, logical well-structured argument like that... so much reason, logic and fact... Duh !

Isn't this exactly what John Banks was vilified about??
WG

Sounds like an underhand deal!

Yes, this rule served Mr Weldon very well indeed.

The Genius Club strikes again. Well done everyone.

A single investor is not equal to controling interests. It is possible one investor could have substantially more than a 5% interest via control of other entities interests and not have to disclose. Not very transparent.

That's wrong. Read up on PPCS v Richmond.

Given the units hold no voting rights it wouldn't really matter iof the whole fund was opened by one investor. More interesting is the lack of interest by farmers in selling units in intitially.

Being of farming stock, wait until farmers have a dry season weather-
wise and the cows dry off -- the townie investors wont get much of a dividend.'At $5.50 a unit purchase price one is just about better to put the capital on TD at 5% and take monthly interest payments (compounding).
Additionally, I reackon in five years the world will be awash with milk and the unit value will have declined.

You gotta be joking. Worldwide the demand is way outstripping new supply.

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