Infant formula supplier Wattle Health Australia will raise up to $12.4million to fund a recent acquisition and joint venture.
Wattle Health, which listed on the Australian share market in March, says it has received commitments from institutional and sophisticated investors to take up a new placement of shares.
Some of the proceeds will be used to fund Wattle Health’s previously announced acquisition of an interest in Australian infant formula maker Blend & Pack and a joint-venture with Organic Dairy Farmers of Australia.
The share placement was significantly oversubscribed, with the total bids received more than $20 million.
Wattle Health shares rose following the announcement.
Wattle Health executive chairman Lazarus Karasavvidis said the take-up of the share placement represented a vote of confidence in Wattle Health’s direction.
‘‘This is an exciting time for Wattle Health Australia and we look forward to achieving our aim of being the nutritional dairy company of choice,’’ Mr Karasavvidis said last Thursday.
Wattle Health announced in July it would acquire a five per cent stake in Blend & Pack for $5million.
Blend & Pack is one of eight infant formula manufacturing plants in Australia licensed by Chinese authorities to produce infant formula for China’s market.
Wattle Health and fresh milk supplier and processor Organic Dairy Farmers are considering a joint venture for the production of dried organic powdered milk.
The new share placement will proceed in two parts.
The first tranche will involve the issue of up to 16.3million shares at 56¢ each, to raise a maximum of $9.1million.
The second tranche, which is subject to shareholder approval, will involve the issue of up to six million shares to raise $3.3 million.
On top of the new share placement, Mason Resources Finance, which is the majority shareholder in Blend & Pack, will exercise an option to subscribe for $500000 in Wattle Health shares.
Mason, through Brilliant River Ltd, is already a significant major shareholder in Wattle Health.