Tue, Jun 25, 2013 - Page 15 News List

NZ prepares for first-ever Chinese IPO


New Zealand’s yesterday deepened its economic ties with China with plans for the first initial public offering (IPO) of a Chinese company on the New Zealand stock market.

Dairy company Synlait Milk announced it plans a listing next month to raise capital to expand its infant formula business. Synlait is majority owned by Chinese company Bright Dairy & Food Co (光明乳業).

China’s thirst for New Zealand milk saw it overtake Australia this year as New Zealand’s largest export market. New travel figures released yesterday also show that Chinese tourism was up 30 percent in the year ending last month. About 221,000 Chinese tourists visited New Zealand during the year, second only behind the 1.2 million tourists from Australia, according to Statistics New Zealand.

Other New Zealand companies, including farm supplier PGG Wrightson and appliance maker Fisher & Paykel Appliances, have been bought by Chinese companies. However, Synlait’s listing would mark the first such initial public offering by a Chinese-owned company, New Zealand stock market spokeswoman Kate McLaughlin said.

Bright does not plan to sell any of its Synlait shares, but the IPO will dilute its stake from 51 percent to about 40 percent. A governance agreement would allow Bright to retain effective control of Synlait by appointing four of eight directors and retaining the ability to remove the managing director.

Synlait’s listing on the NZX Main Board is expected to raise about NZ$120 million (US$93 million) and would value the company at between NZ$305 million and NZ$372 million.

Synlait cofounder and managing director John Penno said New Zealand’s dairy products are in great demand in China. He said he is not concerned about the potential for a slowing Chinese economy, adding that he sees plenty of upside in China for New Zealand’s premium dairy products.

“China can’t continue to grow the way it has and a slowdown is inevitably going to happen,” he said. “But it’s also becoming more urbanized, people have an improved quality of diet, and they realize the importance of these products for families and young children.”

Bright, which is listed on Shanghai’s stock exchange, bought its 51 percent stake in Synlait in 2010 for NZ$82 million.

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