NZ dairy manufacturer plans to list on ASX to raise up to A$20M for expansion

Friday 16th March 2018

The owners of a South Island dairy manufacturer plan to list their company on the Australian Securities Exchange, raising as much as A$20 million to expand.

Australian-based Keytone Dairy Corp, whose New Zealand Keytone Enterprises (NZ) unit manufactures and exports dairy and nutrition blended products to Asia from its Christchurch factory, is seeking to raise between A$15 million and A$20 million ahead of a listing on the ASX in May, the company said in a statement. Keytone Enterprises is 49 percent owned by Shanghai-based venture capital firm Long Hill Capital, 17 percent owned by managing director James Gong, and 34 percent owned by chief operating officer Vivienne Cheung.

Keytone built a state-of-the-art dairy packing and blending facility in Sockburn in 2013, where it produces milk powder, sheep milk powder, kiwifruit milk powder and lactoferrin under its own brands as well as manufacturing a range of powdered dairy products for supermarkets and other customers under their own private label brands. The company last year bought two adjacent sites in the Izone Industrial Park in Rolleston where it plans to build new manufacturing facilities enabling it to expand into new products.

“The ASX listing will assist Keytone Dairy to grow and expand," Gong said. "The company has purchased land for two new manufacturing facilities it plans to build. Once completed, the first facility will enable Keytone Dairy to expand into a number of new products with increased capacity realised through the addition of new powder blending and packing lines.

“We believe that demand for these new products will be satisfied by Keytone Dairy’s existing customers. By expanding its capacity to manufacture powdered products, it is expected that Keytone Dairy will gain access to high-volume customers in China and other Asian countries.”

New Zealand is the eighth-largest milk producing country in the world, and accounts for 3 percent of global milk production. While it produces a similar amount of milk to other comparable countries such as the UK and France, its small population means most of the production is exported. Farmers control about 85 percent of the industry through cooperatives, although the country has attracted a wide range of global investors in the dairy industry over the past 15 years since deregulation, and Chinese investors have been particularly active amid increased demand in Asia's largest economy and after the two countries signed a free-trade agreement in 2008, according to a government guide to the industry published last year.

Keytone Dairy said it plans to lodge a prospectus with the Australian Securities and Investments Commission in coming weeks, and expects a bookbuild to take place in April.

(BusinessDesk)

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