Blackstone is the latest private equity name to join the list of potential interested parties for Fonterra’s $2bn-plus Mainland Group.
A new name has emerged among the private equity suitors circling Fonterra’s $2bn-plus Mainland Group – Blackstone.
The understanding is that the world’s largest private equity firm is keen on Fonterra’s Southeast Asia business.
Market experts say that part of the offering is the most attractive to private equity, because it is a reasonably simple part of the business and comprises just branded products – which means they would not face the complication of dealing with farmers.
It also offers the prospect of operating in higher-growth markets.
It is being described as one of the most complex carve-outs seen in the local market and comes with millions of dollars in costs.
The sale is designed to return funds to Fonterra’s co-operative owners in New Zealand in order to invest in their own dairy farms there.
Some of the best-known dairy Oceania brands are on offer, including the rights to sell the Bega brand, Western Star Butter, Perfect Italiano and Mainland cheeses and Anchor butter, Kapiti dairy products and Fresh n Fruity yoghurt.
Bidders are circling the business as institutional fund managers are also being warmed up for a potential float of Mainland Group, which is subject to a dual track process whereby interest is being tested for both options.
A high-level presentation has been sent out to investors and was released on the New Zealand stock exchange on March 10 when it told the market it had started meeting prospective investors as part of a roadshow.
The roadshow meetings are being held in New Zealand, Australia and Asia, led by Mainland Group chief executive-elect Rene Dedoncker and chief financial officer Paul Victor.
The presentation says that Mainland Group generates $NZ4.9bn in annual revenue and $NZ200m of annual earnings before interest and tax with margins of about 4 per cent.
It has 15 manufacturing sites to sell across more than 20 countries.
Its Oceania business includes consumer brands and a food service business, and an ingredients business in New Zealand, and it generated $NZ498m of gross profit for 2024.
Southeast Asia’s consumer business generated $NZ203m, the consumer and food service business in Sri Lanka $NZ106m and the Middle East consumer business $NZ41m.
Overall the business, excluding Sri Lanka, has a compound annual growth rate of 7 per cent.
Milk powder accounts for 37 per cent of gross profit, followed by cheese with 23 per cent, butter and cream with 18 per cent, liquid milks 16 per cent and cultured dairy foods at 5 per cent.
As previously reported by DataRoom, 30 parties have lodged expressions of interest.
Bega is believed to be keen on Mainland Group’s Oceania business, while Lactalis is interested in the entire operation, advised by Rothschild.
Saputo, Danone, Kohlberg Kravis Roberts, Pacific Equity Partners and CVC are also believed have been taking a look, as has Warburg Pincus.
Working on the sale are Craigs, Jarden and JPMorgan.
Information memorandums are currently in the market and first-round bids are due at the end of March.
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