Units in the new Fonterra Shareholders Fund have debuted at $6.66 per unit - a $1.16 premium to their $5.50 issue price.

The units do not confer a direct voting interest in Fonterra but their trajectory is expected to be based on the performance of the cooperative.

Interest in the units was such that brokers had to heavily scale back investor applications during the book-building phase of the offer.

The units form an integral part of Trading Among Farmers (TAF), which has two elements.


The Fonterra Shareholders Market, which will also start today, will allow farmers to trade Fonterra shares exclusively among themselves.

The second part, the $525 million Fonterra Shareholders Fund, will give investors access to Fonterra's dividend flow.

A registered volume provider will facilitate trading in the farmers market but can also exchange shares for units.

Fonterra priced its units at $5.50 apiece, the top end of Fonterra's desired range, with 42 per cent of the fund being sold to overseas investors.

The scheme is aimed at reducing Fonterra's redemption risk, which is when the cooperative has to pay out shareholders when they exit the sector.

At $5.50, the units are expected to yield 5.5 per cent a year.

The unit's debut coincided with the official opening of Fonterra's new $500m milk processing plant at Darfield, near Christchurch.

The plant will process 2.2 million litres of milk a day into whole milk powder bound for South East Asia, China, and the Middle East.