Bubs Australia shares dip after raising $30 million to fund Asia expansion

Bubs Australia shares have dipped after the goat milk infant formula company successfully raises $30 million through a share placement offer.

Bubs Australia plans to raise $35 million to payout its purchase of Australian Deloraine Dairy and expand into Asia pacific.

SHARES in Australia’s biggest goat dairy has dived almost 8 per cent after it raised $30 million to fund its purchase of an infant formula producer and extend its reach across Asia and the Pacific.

Bubs Australia shares fell from a high of $1.03 to 97 cents on Friday after big investors snapped up 31.6 million new shares through a placement offer at 95 cents each.

The ASX-listed company plans to raise another $5 million on Monday from existing shareholders, who will be given the opportunity to buy up to $30,000 worth of shares at the same discounted rate of 95 cents each as part of a share purchase plan.

The bulk of the funds raise, some $15 million, will be used to pay out its purchase of Australian Deloraine Dairy over the next three years if performance targets are met.

The dairy has Chinese approval to can infant formula and was bought in April for $25 million and almost 15.4 million Bubs shares worth $10 million.

Bubs founder and chief executive Kirty Carr told investors on Friday about plans to extend the company’s footprint beyond China, using $5 million of raised capital to enter three new markets within the next 12 months, with Hong Kong at the top of the list.

Bubs has also secured access to 135 Bibo Mart shops, the largest Mother and Baby retail chain in Vietnam, and is scoping opportunities to launch on Alibaba’s South East Asia eCommerce platforms Lazada and RedMart.

Another $5 million from the share placement will be spent gaining access to more bricks and mortar Mother and Baby stores in China for Bubs infant formula products still waiting on regulatory approval from that nation’s State Administration for Market Regulation.

Mrs Carr said the share placement put the company in a position to build on operational momentum established during the year, which saw domestic sales increase by 153 per cent to $35.7 million and net sales to China increase 208 per cent compared to last year.

“Key among these are the Beingmate Joint Venture in Shanghai serving Mother and Baby stores and the launch of Bubs organic cow’s milk infant formula in Australia through the equity alliance with Chemist Warehouse and soon to be exported to China via the cross-border e-commerce channel,” Mrs Carr said.

The joint venture with Beingmate – announced in March – allows Bubs to make the most of Chinese-owned Beingmate’s distribution network of 30,000 Mother and Baby stores.

“We will also be developing an innovation pipeline to expand our reach into segments beyond infant formula and toddler nutritionals to the $1 billion per annum Chinese junior 4 to 7 year-old nutritionals market, and into expanding goat dairy brands to cater for a growing market for science-cased adult formulations,” Mrs Carr said.