CMIA in Singapore take-private deal

CMIA and China Merchants have completed a $23 million take-private of a Singapore-listed Chinese agriculture company.

CMIA Capital Partners in Singapore and China Merchants Technology Holdings in Hong Kong have completed the $23 million privatisation of Singapore-listed agriculture machinery manufacturer China Farm Equipment, according to a CMIA statement.

CMIA declined to comment on details of the transaction.

According to a source with direct knowledge of the matter, about $15 million of the investment capital was part of the take-private transaction and the rest of the investment will be used to grow the company.

The management of China Farm already held a majority stake in the company before the investment, Private Equity International’s source said, and many other shareholders were also willing to swap their shares for a stake in the privatised company. The company was valued at S$70 million (€43 million; $56 million) at the time of the take-private.

The new investment will give the two investors a stake of between 20 to 30 percent, said PEI’s source, and together they will hold two board seats.

The investment comes out of CMIA China Fund IV, according to the statement. The fund was launched last year and has already held a first close. It is targeting $150 million. The fund has also completed two investments at this point, according to Kian Woon Yap, partner at CMIA.

Yap added that CMIA will continue to look out for China take-privates because of their low public market valuations. However, the firm will only consider quality companies in the food and agriculture business, he said.

“The quality of many of these Chinese listed companies is doubtful,” Yap said.

This is only the most recent in a string of Chinese take-private deals. Since accounting and fraud scandals at some Chinese companies have popped up, other Chinese companies have seen their valuations plummet. The number of private equity-backed take-private offers for Chinese companies rose to eight in the last half of 2012, as compared to four for all of 2011, PEI reported earlier.

Founded in 2003, CMIA Capital Partners has so far led $200 million in investments across China and Southeast Asia, primarily in the food and agriculture sector, according to the firm. It’s fourth fund targets China specifically.

Shenzhen-based China Merchants Technology Holdings currently has RMB 3.5 billion (€425 million; $561 million) assets under management, and has directly or indirectly invested in 120 companies in China, according to the statement.