Agriculture

Cash crops

Private equity firms hope to reap profits in the farmyard

For those private equity (PE) investors targeting China, the farmyard is definitely the place to be right now. According to Dealogic, around $932 million was invested in the agribusiness and food and beverages sectors in 2009. So far this year the figure is $611 million. That’s up massively from $189 million in 2008.

The deal sheet is an active one. Hopu – the firm controlled by Fang Fenglei (see WiC25) – bought into Mengniu Dairy, as well as a stake in hog butcher, Yurun Foods. KKR acquired shares in dairy firm Ma Anshan Modern Farming; SAIF Partners took a stake in potato company Landun Xumei Foods and cornmaker, Jilin Sky Scenery. And a consortium including Blackstone and Warburg Pincus recently invested in a rural logistics centre, China Shouguang Agricultural Product Logistics Park.

Latest to China’s harvest festival: Prax Capital made its first investment in the sector in mid-April, providing $15 million in financing for fertiliser, pesticide and fungicide maker Rotam Global Agrosciences.

According to the Wall Street Journal it’s a significant movement of capital during an era of major change in the countryside. “Private equity investors are helping to move land consolidation and the industry’s professionalisation along.”


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