Chinese Billionaire, Richard Liu, has invested $20 million to buy a stake in Murray Goulburn’s newly listed unit trust.
Liu’s e-commerce company, JD.com bought 4.6% of the dairy cooperative’s trust which listed on the Australian Stock Exchange (ASX) on July 3, making it the sixth biggest stake holder behind the Chinese food processing and purchasing giant, China Resources Ng Fund which owns 4.9%.
Mr. Liu recently stated that JD.com, China’s second biggest internet retailer, was going to be seeking out investments in overseas companies, particularly in Australia, and just this month launched an online “Australian Mall” in collaboration with ASX-listed companies including a2 Milk and Treasury Wine Estates as a channel to increase sales of Australian goods in China.
The website also sells Murray Goulburn’s Devondale-branded products at a premium compared to domestic retail outlets. A one kilogram pack of Devondale brand full cream milk powder sells for 89 yuan ($19.33) on JD.com compared to $9.89 at Australian retail stores. It is this willingness on the part of Chinese consumers to pay premium prices for safe, Australian foods and beverages that Murray Goulburn is planning to leverage to insulate its members from volatile global dairy commodity prices.
The $500 million raised through the creation of the Murray Goulburn listed trust will be used to fund the upgrading of the co-operative’s factories for the production of more value-added products and away from bulk production.
Units in the trust will have no voting rights within the cooperative in order to retain farmer-control, nevertheless the value of the units has jumped 9.5% since the trust’s listing at $2.30, compared to a decline of 3.2% across the broader market as China’s sharemarket falls to its lowest point in more than 20 years.
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