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Chinese govt fund eyes Fonterra

A multi-billion dollar fund owned by the Chinese government is in talks about investing in Fonterra's newly-created shareholder fund.

China Investment Corporation (CIC), the Chinese sovereign wealth fund which manages about $482 billion in assets, was looking at investing a total of less than $100 million in the fund by the end of November, the Wall Street Journal reports.

The world's largest dairy exporter last month unveiled the Fonterra Shareholders' Fund, a fund of about $500 million in which unit holders would get rights to share dividends without owning the shares.

The Wall Street Journal says "people with direct knowledge of the matter" say CIC is looking at Fonterra as an investment as it looks for overseas investments based on foreign businesses which could benefit from a growing Chinese economy.

No single investor in the Fonterra fund is permitted to hold more than 15 per cent of the available units.

Fonterra's shares will remain in the hands of its farmer shareholders, who number about 10,500.

Fonterra could not be reached for comment on Thursday.