New Zealand's Fonterra Co-operative Group Ltd (FCG.NZ) said it paid $553 million for a near 20 percent stake in China's Beingmate Baby and Child Food Co. Ltd (002570.SZ), as it looks to boost its presence in the country's branded dairy industry.

China is a crucial market for Fonterra, importing about a quarter of New Zealand's total dairy exports to feed growing demand for milk products, particularly formula, from the country's booming middle class.

Fonterra said it paid 18 yuan per share for 192 million shares in the Chinese baby food and infant formula maker, giving it an 18.8 percent stake in the company, short of a target of 20 percent announced in August.

"We are extremely satisfied and confident that the partnership can and should proceed on the basis of the 18.8 percent stake," Fonterra Chief Financial Officer Lukas Paravicini said in a statement on Monday.

Fonterra was not immediately available for further comment, but analysts said the smaller stake may have been due to a fall in the New Zealand dollar NZD= since the offer was announced.

The price per share was in line with initial plans, but the total price tag of around NZ$752 million was 22 percent higher than initially forecast, reflecting the weaker currency.

The price per share represented a 1.7 percent premium to Beingmate's trading price of 17.68yuan per share on Monday, and was at the top end of its one-year average around 12-18yuan.

Fonterra was paying a high price to raise its presence in China's branded infant formula market, valued at around $18 billion in 2014 by Euromonitor, given that many multinationals are investing heavily and demand expectations are easing, said Forsyth Barr analyst James Bascand.

The New Zealand company, the world's largest dairy exporter by volume, has already lowered its forecast for Chinese dairy demand, anticipating consumption to increase 4 percent a year through 2020, from an earlier forecast of 7 percent.

Fonterra's sharetrading fund (FSF.NZ) was little changed after the announcement, after rising around 1 percent to NZ$5.90 in earlier trade.