Chinese takeover of Bellamy’s infant formula would benefit tax-haven entities

Almost 12% of firm’s shares are held by Curaçao-registered entity linked to Kathmandu founder Jan Cameron

Ben Butler

Tue 17 Sep 2019 

Bellamy’s infant formula
 If the Chinese bid for Bellamy’s is successful, an entity linked to Kathmandu founder Jan Cameron will benefit. Photograph: David Gray/Reuters

More than $176m will find its way to a mysterious entity in the Caribbean tax haven Curaçao linked to Kathmandu founder Jan Cameron if a proposed takeover of the infant formula company Bellamy’s Australia by a Chinese group goes ahead.

The $1.5bn takeover bid, lodged by Hong Kong-listed China Mengniu Dairy Company, has drawn fire from Tasmanian independent Andrew Wilkie because one of Mengniu’s key shareholders is a company owned by the Chinese state, the China National Cereals, Oils and Foodstuffs Corporation (Cofco).

Bellamy’s success has been driven by the immense popularity of Australian infant formula in mainland China following a scandal in 2008 in which the local product was adulterated with melamine, killing several children and sending several thousand to hospital.

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That drove an explosion in the export of Australian formula through the grey-market daigou, or personal shopper, channel.

But Bellamy’s efforts to develop a direct export market in China have been hampered by the Chinese authorities, which temporarily banned Bellamy’s products in 2017 and have yet to approve the company’s application to restart direct sales.

The company’s shares soared by more than 50% when the takeover proposal was unveiled on Monday, and on Tuesday afternoon were changing hands for about $12.95.

Almost 12% of the company’s shares are held by the Black Prince Private Foundation, an entity associated with Cameron and registered in Curaçao, a former Dutch colony off the coast of Venezuela best known for its citrus-flavoured spirits.

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Cameron initially denied any association with Black Prince, but following inquiries from Bellamy’s in January 2017 the foundation told the stock exchange there was an “expectation” it would act in accordance with the wishes of the Elsie Cameron Foundation “as expressed by the directors of its trustee”, being Jan Cameron and an associate of hers, the lawyer Rodd Peters.Advertisement

Separately, Cameron controls another 490,000 shares in Bellamy’s through an Australian company, Bicheno Investments, which stands to reap about $6.5m from the sale of its shares to Mengniu.

Jan Cameron declined to comment.

Black Prince is not the only tax haven entity set to profit from the sale of Bellamy’s – the investment fund Broad Peak, which controls almost 7% of company stock and is registered in the Cayman Islands, is in line to collect about $104m.

The takeover requires approval from the treasurer, Josh Frydenberg, who will receive advice from the Foreign Investment Review Board, which is part of the Treasury.

In previous years such a sale would have been expected to sail through the Firb process within the usual time limit of 30 days, but heightened concerns about Chinese state influence on the Australian economy have made the process politically fraught.

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It is believed Mengniu approached the board about two months ago and Firb has extended the time for it to consider the application by 30 days.

The bid’s success also depends on the attitude of Cameron, a veteran businesswoman who made her fortune as founder of outdoor adventure gear chain Kathmandu.

She sold out of Kathmandu in 2006, and in 2009 spent $90m buying the failed Retail Adventures, which ran discount chains Crazy Clark’s, Sam’s Warehouse, Go-Lo and Chickenfeed, from its receivers.

The millions she poured into the company could not keep it afloat, and it again collapsed in 2012.

Cameron’s investment in Bellamy’s has been much more successful and is on track to record a more than 12-fold gain in five years.

The Cameron-linked Black Prince was an early shareholder in the company and was recorded as owning 14m shares when it floated on the exchange in 2014 at $1 a share.