WELLINGTON, June 24 (Reuters) - New Zealand dairy company Synlait Milk Ltd plans to raise a total of NZ$120 million ($92.79 million) in an initial public offering and share sell-down, ending the majority stake held China's Bright Dairy.
The milk powder processor owned by Shanghai-based Bright , Japan's Mitsui & Co. and Synlait Ltd, a private local company, said it was seeking to raise NZ$75 million in fresh capital. Mitsui and Synlait Ltd will offer a further NZ$45 million to pay down debts and expand operations.
Bright, which has held a 51 percent stake in the firm since 2010, will not take part in the sell down, Synlait Milk said in a statement. It added that a dilution in Bright's shareholding would lower its stake to around 40 percent of the company.
Synlait Milk competes with Fonterra, the world's largest dairy exporter, to produce New Zealand-made milk powder to ship overseas for use in products ranging from milk formula to cheese to feed a growing middle class in emerging countries.
It is one of several small New Zealand companies operating in China's $12.4 billion milk formula market which has grown 12-fold since 2002 as more mothers join the workforce and spend less time breastfeeding.
The company, which exports all of its product, has said it hopes China will eventually account for one-third of its overall revenue. New Zealand supplied 90 percent of the nearly $2 billion worth of milk powder China imported last year.
Synlait Milk set a price range for the offer of NZ$2.05-NZ$2.65 per share, giving the company a market capitalisation of NZ$305 million-NZ$372 million.
Given growing interest in investing in New Zealand's dairy industry, market participants said they anticipated solid demand for the issue despite a stumble in the country's share prices, which have retreated 6 percent from a lifetime high hit in May.
But some questioned whether many offshore investors would be attracted to the issue, given its limited size.
"There might be some offshore interest, but it will probably be the more smaller, opportunistic players," said a New Zealand fund manager who declined to be named.
"It will be hard for global investors to gain a material stake."
In the offer jointly lead managed by First NZ Capital Securities Limited and Goldman Sachs New Zealand Limited, shares will be priced on July 9 following a book build, and will close on July 19.
Synlait Milk said it planned to use the new funding to pay down debts, build a new milk powder dryer and a blending and packaging plant at its headquarters outside Christchurch, while it also plans to enlarge its storage facilities.
It aims to control as much as the milk formula manufacturing and packaging process as it can, as products made and packaged by foreign companies outside China demand hefty premiums at supermarkets in China, where food safety scandals are rife.
The IPO and offer comes as Fonterra plans to introduce its branded milk formula products in China later this year, while Chinese dairy heavyweights Inner Mongolia Yili Industrial Group and Yashili International Holdings plan to build their own milk formula processing plants in New Zealand.
Earlier this month, China Mengniu Dairy Co Ltd, the country's largest dairy company, signed a takeover deal to buy Yashili. ($1 = 1.2932 New Zealand dollars) (Reporting by Naomi Tajitsu; Editing by Jeremy Laurence)