Cofco Corp., China’s largest grain trader, is planning a public listing of some of its assets, including a majority stake in Noble Group Ltd.’s agribusiness unit that it bought this year for $1.5 billion.

The proposed spinoff highlights Cofco’s efforts to become a global agricultural producer and distributor, complementing its role as the state-run food supplier for the world’s biggest consumer of rice, soybeans and wheat.

The listing could take about three years and the company doesn’t plan major acquisitions “any time soon,” according to Chairman Frank Ning. The new entity would include production capacity in South America and the Black Sea, processing, logistics and trading and seed technologies.

Cofco agreed in April to buy a 51 percent stake in the Noble unit after buying a similar-sized stake in Dutch grain trader Nidera Holdings BV in February. The two transactions are the largest overseas acquisitions in the history of both Cofco and China’s grain and vegetable oil industries, the company said in a statement.

“It takes time to digest after the two deals,” Ning said yesterday. The assets will help Cofco become a “leading agricultural company with world-class scale in trade, processing and logistics,” he said.

China’s food demand is rising with its growing economy and it has looked further afield to feed a country with insufficient farming resources and a growing dependence on imports. The nation is already the biggest soybean buyer and will become the top corn importer by about 2020, the U.S. Department of Agriculture estimates.
Global Player

The acquisitions “will extend Cofco’s global reach, enabling it to source soybeans from Argentina through Nidera supply chain or buy sugar from Brazil through Noble Agri,” Ning said “It will also help ensure food supply to China.”

Cofco provided 60 percent of the funding for the Noble and Nidera investments with the remaining 40 percent coming from a group that includes Chinese private-equity firm Hopu Investment Management Co., Singapore’s state-owned investment arm Temasek Holdings, Standard Chartered Private Equity and the World Bank’s International Finance Corp. according to the company.

“This was an unprecedented opportunity as China’s soaring grain consumption will alter the trade landscape, giving opportunity to the rise of a whole new global player,” Bi Mingjian, managing partner of Hopu Investment, said yesterday.

After the transactions, Cofco’s aggregated revenue will be $63.3 billion, with assets worth $57 billion, the company said in a statement. Annual processing capacity will rise to 84 million metric tons and storage capacity will increase to 15 million tons, the company said.

Founded in 1949, Cofco grew through a series of mergers of state food and animal husbandry companies and is now China’s biggest food company with 60,000 employees. Cofco also runs commercial and residential property, tourist resorts, hotels, and financial services that include a commodity futures brokerage, a regional bank and an insurance venture with London-based Aviva Plc. It has seven listed units.


 

Bloomberg