Fonterra is to sell down its stake in Chinese infant formula company Beingmate. The move comes as the co-op failed to find a buyer for its entire shareholding and is now going to sell down a portion of its stake.

Fonterra paid NZ$750m (€429m) for its 18.8% stake in 2015, in a bid to gain access to Chinese consumers for its infant formula.

Last year, Fonterra wrote down the investment in Beingmate by NZ$405m (€232m). As a result the dairy giant made its first ever annual loss of NZ$196m (€112m).

Expectations

The investment in Beingmate, which was to capitalise on China’s growing demand for infant formula and provide Fonterra with a presence in China’s branded dairy industry, has not performed to expectations.

Shares in Beingmate have almost halved in value since April.

Subject to demand for the shares, under the Chinese stock exchange rules, it is only possible to sell up to 1% every 90 days directly on the exchange, or sell up to 2% in a single block every 90 days.

The decision is part of Fonterra’s three-point plan to turn around the business

Trades greater than 5% can be made to an individual party in an off-market transaction.

The decision is part of Fonterra’s three-point plan to turn around the business.

Despite this move, Fonterra chief executive Miles Hurrell has reiterated the importance of the Chinese market, saying: "China will always be one of our most important markets.

"We’ve got a strong business there and are still very much focused on the areas in China where we can succeed.”