Comvita share placement lifts Chinese investor's stake to 9%
By Pattrick Smellie
Oct. 21 (BusinessDesk) - Manuka honey and health products company Comvita has placed some 2 million ordinary shares with
China Resources Ng Fung, taking the Shenzhen-based Chinese food giant's stake from less than 5 percent to around 9
percent.
The move would "strengthen working capital and provide funding to support several strategic initiatives currently under
consideration by Comvita," the company said in a statement to the NZX after close of trading today, and will give it
access to the Chinese firm's huge distribution network, with thousands of Chinese supermarkets, and help smooth out
supply chain volatility that have affected sales this year.
Comvita shares closed at $10.70, up 0.3 percent and 10 cents per share above the $10.60 value at which the placement was
struck. The shares have risen 26 percent so far this year.
China Resources Ng Fung is a leading integrated food enterprise in China, wholly-owned by China Resources Enterprise
Limited.
In a memorandum of understanding on co-operation in the Hong Kong and mainland China markets, Ng Fung will stock Comvita
products in its stores and more than 4,000 supermarkets belonging to affiliated retailers, and will assist with
regulatory processes "where appropriate".
Comvita announced a joint venture distribution partnership in China last month and its partner in that agreement was
fully supporting the latest initiative.
The Ng Fung deal would "allow Comvita to access potential channels into China for existing and future Comvita products
which may otherwise be unavailable to Comvita" and reduce reliance on third party exporters, which have proven volatile
in the last few months, but which remain "important for Comvita".
"China Resources Ng Fung is a highly reputable corporation," said Comvita chief executive Scott Coulter in a statement.
"The executives respect our culture and the need for Comvita to be a New Zealand controlled business. We are comfortable
from numerous discussions that the key executives of China Resources Ng Fung really do ‘buy in’ to our culture and
values.”
China Resources Enterprises chief executive Weiyong Wang welcomed the invitation to become "a substantial shareholder in
Comvita".
"Comvita has been selling into China for 12 years and we hold the brand in the very highest regard. We believe retention
of significant New Zealand ownership in the long term was and will continue to be a vital ingredient of the business.”
(BusinessDesk)