Deals

CITIC Agri Fund readies $2.65bn war chest for further takeovers

A portfolio company of the Chinese giant will be tasked with managing Dow’s Brazilian assets, which CITIC’s agri unit just bought for $1.1bn in a bid to “become global.”

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CITIC Agri Fund has completed its acquisition of a portfolio of Brazilian corn seed assets previously owned by Dow AgroSciences.

The $1.1 billion deal came as part of “remedies” required by the Brazilian regulator to clear the $130 billion merger between chemical giants Dow and DuPont, announced in December 2015.

Despite the hefty price tag, CITIC Agri Fund still retains about $2.65 billion in dry powder to pursue takeovers, according to reports. The platform was created last year in partnership with Yuan Longping High-Tech Agriculture, in which CITIC bought a majority stake in 2014, and two agricultural listed companies.

CITIC had not responded to a request for comment at the time of going to press.

Longping High-Tech will now be tasked with running the Dow assets, previously named Dow Sementes but rechristened LP Sementes. The company has also acquired the Morgan and Dow Sementes trademarks – the latter for a year – with plans to launch a new brand within the next 12 months.“LongPing is making efforts to become global, and in the long run, LP Sementes will serve as a great complement to CITIC’s agricultural portfolio,” LongPing said, adding that the unit it just took over has an 18.5 percent market share in the Brazilian maize seed market.

The assets include four corn seed production sites and four research centers, along with a copy of the Dow AgroSciences’ Brazilian corn germplasm bank and certain commercial and pipeline hybrids. They generated approximately $287 million in revenues in 2016.

Dow’s agri division retains Dow AgroSciences’ Brazilian corn germplasm bank as well as the remainder of its corn seed production sites and research centers, commercial and pipeline corn hybrids and other related assets.

“[China and Brazil] are resource rich, large in population and vast in planting areas,” LongPing said. “Maize is among the main crops in both, with Brazil having the third largest area planted in the world, while China is the second largest, and the main destination of Brazilian exports.”

Beyond seeds, CITIC Agri Fund is said to be considering investments in animal genetics, veterinary products and crop protection solutions.