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Plans to set up a fund to allow outsiders to tap into Fonterra's dividend payments have turned the spotlight again on one of New Zealand's heavyweights.
Fonterra is a co-operative whose profits are shared by the 12,000 farmers who supply it. If it was a public company, it would be New Zealand's biggest by long way.
Fonterra generates around 20% of New Zealand's exports, 7% of NZ's gross domestic product, and is the world's biggest dairy exporter.
Its refusal to consider an initial public offering has spurred the Dairy Investment Fund to produce a derivative structure to allow outside investors to share Fonterra payments.
The fund pays farmers for the financial benefits of their Fonterra shares, then sells securities to outside investors.
That means farmers keep voting rights, but outside investors have access to Fonterra payouts.
It is intended to be the closest thing to owning shares in Fonterra without buying a dairy farm and without Fonterra actually going through a sharemarket listing.
Hayley Moynihan, an analyst with Rabobank, which lends money to dairy farmers using Fonterra shares as security, says it is another way for farmers to unlock cash tied up in Fonterra.
Stephen Wright from ASB Securities thinks investors would flock to buy if Fonterra ever decided to offer shares.
However, Fonterra says it is not planning to tap equity markets.
