Rural Equities has opted to sell about half of its shares in Fonterra and will start to supply the soon-to-be-listed Synlait Milk with some of its product.
Rural Equities, which is owned by the Cushing family, has a portfolio of 27 rural properties around the country, nine of which it directly manages, and six of which are dairy farms.
The company chose to participate in Fonterra's latest supply offer, which enabled it to sell nearly 800,000 shares in the company, raising about $6 million.
Its two dairy farms in Canterbury will supply Synlait, which unlike Fonterra, does not require farmers to buy shares, while the remainder will continue to supply Fonterra.
Chief executive Brian Burrough said the money could be used to convert some of its other farms to dairy.
"That was a decision we made having looked at what the Fonterra price had done since Trading Amongst Farmers started and also what the alternative uses for that capital were."
He said the business had a number of farms looking for development capital.