Fonterra said it had set its final price for units in the Fonterra Shareholders' Fund at $5.50 per unit - the top end of an indicative $4.60 to $5.50 range.

The price was decided after an institutional and broker bidding process, which finished today.

Fonterra chairman Sir Henry van der Heyden said in a statement the pricing was positive news for farmer shareholders.

Shares on the farmers-only Fonterra Shareholders' Market are expected to track the price of the Fonterra Shareholders' Fund when trading starts on the NZX on Friday.


Chief executive Theo Spierings said investors recognised there was some complexity in the structure of the Trading Among Farmers trading scheme, but that there was also acknowledgement of Fonterra's market position and growth strategy.

As a result of this strong level of interest, the fund expanded to $525 million - which included oversubscriptions of $25 million.

More than 2500 members of the "Fonterra Family'' - such as sharemilkers, former farmers and Fonterra employees - as well as about 7000 retail and institutional investors took part.

A total 58 per cent of units has been allocated to New Zealand retail and institutional investors, as well as the Friends of Fonterra. The remainder had been allocated to institutions based offshore.

"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 will issue 90 million shares to support a fund size of $525m.

The issue of shares by Fonterra would, at the most, affect the co-operative's earnings per share by about one cent. Fonterra said it does not intend to permanently hold the resulting equity.