The investors are allowed to convert up to 30 per cent of the convertible instruments six months after Mengniu's listing in June, and the remainder after the first anniversary.

The placement, solely arranged by Morgan Stanley, was overwhelmingly received by investors, prompting the issue to be priced near the high end of the indicative range of $5.99 to $6.09.

The deal, which was slightly more than 10 times covered, went 'very smoothly' despite the small discount offered, one source said.

The placing price at $6.06 represented a 4.56 per cent discount to yesterday's close at $6.35, after the counter rose 3.25 per cent during the day.

Mengniu shares have soared 61.7 per cent since the initial offering price at $3.925 in June. The listing was jointly led by BNP Paribas Peregrine and Morgan Stanley.

Mengniu's market share rose one percentage point to 20.5 per cent in September from 19.5 per cent in the previous quarter, according to an ACNielsen survey.

The company is confident it will meet its net profit forecast of at least 300 million yuan this year, according to analysts. Last year, Mengniu posted net profits of 164.37 million yuan.

Yet, some analysts are concerned by a slowing growth in milk consumption in China.

'After six years of rally, a slow-down in milk consumption growth has been detected,' wrote China International Capital Corp analyst Paul Yuan in a report, citing figures showing that consumption per capita in urban areas was 12.46kg for the first eight months of this year, compared with an average of 17kg to 18kg last year.

'Mengniu's pricing power remains weak,' the analyst said.