The Asian Development Bank (ADB) has boosted its support for Indonesia’s dairy industry after becoming a new anchor investor in a leading production firm.
Yesterday, at the Indonesia Stock Exchange in Jakarta, local dairy firm Cimory was listed for the first time in an initial public offering (IPO).
On its first day of trading, ADB subscribed to around 19.4 million shares in Cimory, worth 59.9 billion Indonesian rupiah (or $4.2 million).
In a press statement, ADB said its investment will support Cimory’s efforts to expand its production capacity, improving consumer access to nutritious food and supporting stakeholders across the dairy value chain, including smallholder farmers.
In total, Cimory raised 3.67 trillion Indonesia rupiah ($255 million) on its first day of trading, by offering shares representing 15% of the company’s issued share capital.
Carine Sophie Donges, private sector operations investment Specialist at ABD, said: “Dairy is an important industry in Indonesia, as most milk is produced by thousands of smallholder farmers, and reliance on imports is significant as domestic output fails to meet demand for dairy products.
“Through this investment, ADB and Cimory are able to work together to improve farmer livelihoods and rural welfare, promote gender inclusion, and make a significant contribution to food security.”
Cimory is the holding company of the Cimory Group, one of Indonesia’s largest manufacturers and distributors of dairy products and consumer foods.
It has large market shares in yoghurt and flavoured milk products, as well as processed meat and egg-based products.
Farell Sutantio, president director of Cimory, said the company has nurtured its relationship with ADB since the beginning of the COVID-19 pandemic, when ADB provided a development loan to Cimory in early 2020.
“We are delighted to have ADB participate as an anchor investor in our IPO,” said Sutantio.
“We have a strong relationship with ADB, and we look forward to continuing to work with ADB to add value to our business on its environmental, social, and governance dimensions, including gender inclusion and reducing its carbon and environmental footprint.”
Cimory said it intends to use the IPO proceeds to finance the organic growth of the Cimory Group, expanding its production and distribution capacities by 2024.
This expansion is expected to benefit an additional 4,200 dairy farmers (from a baseline of over 9,800 the company procured from in 2020), 5,000 female sales agents (from 2,500 the company partnered with in 2020), and 500,000 households each year (from about 200,000 in 2020).
Distribution networks are expected to expand to serve most of the island of Java and major urban areas in Sumatra, Kalimantan, Sulawesi, and Papua.