Units in the newly-formed Fonterra Shareholders Fund have been priced at the very top of the dairy cooperative's $4.60 to $5.50 indicative range following a two-day institutional book-build, with 58 per cent of units going to New Zealand investors, Fonterra said.

Chief Executive Theo Spierings said investors recognised there was some complexity in the structure of Trading Among Farmers, which is unique to Fonterra, but also acknowledged its prominent market position.

Fonterra accepted $25 million in oversubscriptions, which took the fund's size to $525m.

More than 2,500 members of the "Fonterra Family" - sharemilkers, former farmers and Fonterra employees - as well as around 7,000 retail and institutional investors, bought units.


A total of 58 per cent of units had been allocated to New Zealand retail and institutional investors, as well as the Friends of Fonterra - including employees of Fonterra's Australian unit, Bonlac. The remainder was allocated to offshore institutions.

"The majority of units are held by New Zealanders," Spierings said. "And we have a good balance between retail investors who are more likely to hold onto their units, and professional offshore and New Zealand investors who are likely to actively trade units and provide liquidity in the fund, he said in a statement.

Fonterra shares on the farmer-only Fonterra Shareholders' Market are expected to track the price of units in the Fonterra Shareholders' Fund when trading on the NZX starts on Friday.

The issue will be the biggest sharemarket listing in Australasia since the privatisation of Queensland Rail in 2010.

Trading Among Farmers share trading scheme has been designed to offset redemption risk, which is when the cooperative is left with an exposure when it pays out farmers who leave the sector.

In a separate development, market sources said the intense interest in Fonterra had convinced the alternative milk company, NZX-listed A2 Corp, to ride on the dairy giant's coat-tails and embark on its own $200m capital raising through brokers UBS.

A2 Corp had chosen to "piggyback" on Fonterra's extensive investment roadshows around the world, which had drawn investor interest to the sector, said one market source.

He said the A2 Corp capital raising would help absorb investment flows from those large numbers of investors who missed out on Fonterra altogether.

The A2 Corp capital raising would involve an institutional placement of new stock plus existing stock, giving the major shareholders an opportunity to sell down their holdings.

"It's a very similar exposure to Fonterra - providing branded, value-added value milk - so the 'sell' on it is that if you can't get Fonterra, then this is just as good," the source said.

It is understood that seven or eight institutions are involved in the A2 Corp capital raising, which is expected to occur before Christmas.

A2 Corp maintains that "A2" milk - which comes from cows specially selected to produce A2 beta-casein protein rather than A1 - has special health properties.

The company, which has a market capitalisation of $399m, has trading activities in Australia and New Zealand, and is pursuing growth in Asia, North America and Europe.

In 2010, A2 Corp repositioned to become a FMCG (fast-moving consumer goods) business.

A2 has a dairy milk business in Australia and is constructing a processing facility in south west Sydney to support its continued growth, according its website.

Mountain Road Investments, a company associated with A2 chairman Cliff Cook, has a 24.6 per cent stake in the company. ASX-listed Freedom Foods has 26.8 per cent and AMP Investments 6.5 per cent, according to the latest annual report.

A2 was founded in 2000 by South Island entrepreneur, the late Howard Paterson, and scientist Dr Corran Mclachlan.