Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Fonterra units stag 22 percent on debut, farmers less keen

Fonterra units stag 22 percent on debut, farmers less enthusiastic

by Jonathan Underhill in Darfield

Nov. 30 (BusinessDesk) - Nov. 30 (BusinessDesk) - Fonterra Shareholders' Fund units soared as much as 22 percent on their NZX debut as investors leapt at the chance to get access to the dairy exporters' earnings stream, though no farmers used the scheme to trade their own shares.

The units jumped as high as $6.71 from the $5.50 offer price set in this week's book-build in a flurry of trading. The price settled back to $6.60, with 12.6 million units, or about 13 percent of the fund, changing hands.

"Today we have permanent capital based on a true market price," said Fonterra chief executive Theo Spierings."We have seen that true market price just now."

None of Fonterra's farmer shareholders used the mechanism to trade shares among themselves.

"Farmers will watch and see what happens. They have got a lot of time to make their decisions," said chairman elect John Wilson, who says he hasn't personally taken up units. Fonterra plans to make "another couple of offers to farmers in the new year" of shares. The details can't be made public yet.

Wilson says he expects the units "will settle down over time and end up trading on their fundamentals. But in the first flush of trading "we know there's been so much demand."

Fonterra chief financial officer Jonathan Mason said the new opportunities would let farmers trade their production shares, as spelled out in the prospectus, though the board has yet to decide on the detail.

Given the strong demand for the units Mason said Fonterra would consider a retail bond offer as existing debt matures. "Another retail bond is clearly one of the ideas we would look at as maturities come up," though he noted that in recent months they have offered more attractive interest rates.

Some 58 percent of the $525 million of units were allocated to New Zealand retail and institutional investors and the class of investors known as Friends of Fonterra, which includes Australia’s Bonlac. The rest were sold to foreign institutions.

The change will substantially reduce the share redemption risk on Fonterra’s own books, which has billowed to more than $700 million in recent years, by giving farmers a venue to trade the shares among themselves.

While the fund attracted massive demand, the pricing was deemed too rich for research firm Morningstar, which last week gave a 'do not subscribe' recommendation. Morningstar said investors would be better served waiting for the units to list and consider buying in if the price fell to $4.95.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

NASA, NOAA: Find 2014 Warmest Year In Modern Record

Since 1880, Earth’s average surface temperature has warmed by about 1.4 degrees Fahrenheit (0.8 degrees Celsius), a trend that is largely driven by the increase in carbon dioxide and other human emissions into the planet’s atmosphere. The majority of that warming has occurred in the past three decades. More>>

ALSO:

Scoop Business: New Zealand’s Reserve Bank Named Central Bank Of The Year

The Reserve Bank of New Zealand’s efforts to stifle house price inflation by using new policy tools has seen the institution named Central Bank of the year by Central Banking Publications, a publisher specialising in global central banking practice. More>>

ALSO:

Science Media Centre: Viral Science And Another 'Big Dry'?

"Potentially, if there is no significant rainfall for the next month or so, we could be heading into one of the worst nation-wide droughts we’ve seen for some time," warns NIWA principal climate scientist Dr Andrew Tait. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news