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Wednesday, August 27, 2014

Bread and butter: Investors pile into Australia's dairy sector, (TSE: SAP.TO)

A tiny financial services firm on the Sydney bourse has unveiled plans to sell shares as it re-lists as a dairy company, counting on investor interest to develop an industry struggling to keep up with Asia's exploding demand for milk, butter and cheese. The stars are aligning for companies aspiring to enter Australia's A$4 billion ($3.7 billion) dairy sector but which lack the financial heft to wage an outright takeover of a big producer. Offshore pension funds are now on the lookout to acquire strategic stakes in the sector, as well as players in the global dairy industry itself.Six months ago, Saputo Inc took over Warrnambool Cheese and Butter Factor Co Ltd after a very public fight for Australia's oldest dairy producer. The Canadian company views Australia as a platform to tap growing demand in Asia's emerging markets."There's been a renewed interest in Australian dairy assets," said Michael Harvey, a dairy analyst at Rabobank, noting a significant portion of the interest is coming from outside the industry."That's about managed money and superannuation funds wanting to invest in agriculture, and they see dairy and Australian agriculture as a great way to do that."

Saputo Inc. is a dairy processor in Canada and cheese producer in the United States. Shares of SAP fell by 0.21% or $-0.14/share to $66.19. In the past year, the shares have traded as low as $46.39 and as high as $69.24. On average, 251802 shares of SAP.TO exchange hands on a given day and today's volume is recorded at 131853.