The Asian Development Bank (ADB) announced on November 6 that, acting as an anchor investor, it has subscribed to around 19.4 million shares, worth 59.9 billion rupiah (US$4.15 million), in Cisarua Mountain Dairy (Cimory), an Indonesian dairy company that launched its initial public offering (IPO) on the Indonesia Stock Exchange.

Overall, Cimory raised 3.67 trillion rupiah through the IPO, which was equivalent to 15% of the company’s issued share capital. The company sold 1.19 billion shares at 3,080 rupiah each, or near the top of the marketing range of between 2,780 rupiah and 3,160 rupiah.

The dairy intends to use the IPO proceeds to finance the group’s organic growth, 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) and an additional 5,000 female sales agents (from the 2,500 it partnered with in 2020), and to reach out to an additional 500,000 households each year (from about 200,000 in 2020). Distribution networks are expected to expand to serve most of Java island and major centres in Sumatra, Kalimantan, Sulawesi and Papua islands.

Through this investment, ADB and Cimory are able to work together to improve farmer livelihood and rural welfare, promote gender inclusion and make a significant contribution to food security, says Carine Sophie Donges, ADB’s private sector operations investment specialist. “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,” she adds.

Cimory is the holding company of the Cimory Group, a leading manufacturer and distributor of dairy products (in particular yogurts and flavoured milk) and consumer foods (processed meat and egg-based products) with well-established household brands in Indonesia.

ADB previously assisted Cimory when it granted the company a US$15 million loan (in rupiah equivalent) in September 2020 to support the livelihood of workers in the dairy value chain and promote food security in Indonesia amid the Covid-19 pandemic.

The loan helped Cimory in its daily operations, which supported about 3,300 smallholder dairy farmers, 2,200 employees, and over 1,500 direct sales agents – most of them women – as they endured the health crisis. The loan also allowed Cimory to increase its direct sales force and provide farming best practices and financial literacy training to at least 1,000 women farmers.

The company, as Farell Sutantio, its president-director points out, will continue to work with ADB to add value to its business by improving on its environmental, social and governance dimensions, including gender inclusion and reducing its carbon and environmental footprint.