BEIJING, CHINA — COFCO Corp., the Chinese state-owned grain trader, unveiled on Oct. 28 plans for an initial public offering (IPO), in a move that would allow it to compete with leading U.S. agribusinesses, according to several news reports.
The planned IPO would include assets recently acquired from Netherlands-based Nidera and the Hong Kong-based Noble Group. COFCO has invested $3 billion this year in the acquisitions, and would put these assets, and potentially other COFCO businesses, into an international joint venture that would pursue an IPO, according to newspaper reports.
The company said its goal with the acquisitions was to connect large grain production areas, including those in South America and the Black Sea region to Asia. The purchases give COFCO locations around the world to procure grain and absorb agro-technology. Noble Agri’s operations include sugar mills in Brazil, soybean crushers in Argentina and grain silos in Ukraine. Nidera is mostly known for grain trading, but is also develops yield-boosting seed technology.
“The idea is to bring the three companies together, really together. But that’s a long-term plan,” said Nidera Chief Executive Ton van der Laan.
COFCO hopes the move will put it on par with the companies that dominate the world grain trade, including Cargill, Archer Daniels Midland Co., Bunge and Louis Dreyfus, reports said. COFCO is China’s largest grain trader and is expected to see aggregated revenue of $63.3 billion. Annual processing capacity is expected to rise to 84 million tonnes, port transfer capacity to 44 million tonnes and storage capacity to 15 million tonnes.
Frank Ning, COFCO chief executive, was quoted in reports as saying the joint venture would be a vertically integrated agribusiness, not just a grain trader. It would be able to supply seeds to farmers as well as buy, store and ship their grain.
Ning said the listing might take three years to complete. COFCO will not be making any more acquisitions in the short term, he said.
With rising incomes and richer diets, combined with a shortage of arable land and clean water, China is having to look outside its borders for more grain. The nation is already the world’s top importer of soybeans.
The structure of the joint venture would be complex, news reports said. The company has five listed units in Hong Kong, including soy trader China Agri-Industries Holdings; food and beverage unit China Foods; and dairy company Mengniu Dairy. COFCO has not said whether the units would be folded into the joint venture.