A consortium of Chinese state-owned grain trader Cofco Corporation (China National Cereals, Oils and Foodstuffs Corporation) and private equity firm Hopu Investment has acquired the remaining 49 percent of Noble Agri, after they bought 51 percent of the Hong Kong agricultural production and trading business in 2014.
Noble Group’s shareholders have now approved the deal, initially reached in December last year, to sell its remaining Noble Agri stake for $750m, although Noble Group had valued its shares in the business at $1.34 billion. The group was under pressure to sell after regulators raised concerns over poor liquidity.
It is not clear how much Hopu, which has teamed up with the state-owned enterprise in previous agriculture-related investments, contributed to the investment. Hopu’s consortium, including the firm’s Hopu US dollar Master Fund II, took 17 percent of the shares when the 51 percent was initially purchased in 2014, while Cofco took the remaining 34 percent, Agri Investor reported.
In the last two years, Cofco has been working with private equity investors to expand its existing operations and acquire new ones. In 2014, a consortium comprising KKR, Baring Private Equity Asia, Hopu Investments and Boyu Capital invested in Cofco subsidiary Cofco Meat to build and manage large-scale industrialised pig farms and meat-processing plants in China. Last May, it was reported that China’s sovereign wealth fund China Investment Corp (CIC) had made formal steps to initiate a joint venture with Cofco.
Hopu, which was founded by some of Goldman Sachs’ most senior previous Chinese staff, aims “to create, develop, and pursue investment opportunities driven by China’s ongoing economic reforms and development,” according to a press release. Hopu raised $2.5 billion for its first fund, launched in 2008, and most recently held a close on its current Hopu US dollar Master Fund II at $1.1 billion. The fund focuses on natural resources, financial services and the consumer sector, and its investors include sovereign wealth funds and global institutional investors.
Noble Agri specialises in processing agricultural commodities from India, Eastern Europe, Australia Latin America and Africa, supplying mainly Asian and the Middle Eastern markets.
Hopu has made investments in listed and privately-owned companies, particularly in technology, but reform in China’s agricultural sector has been slower than in other areas, and these changes are only just beginning to attract private equity acting independently from the state in Chinese agriculture.
One of these is former Goldman Sachs Asia executive director and Warburg Pincus partner Chang Sun, who has set up two agricultural projects as a proof of concept that private investment in Chinese agriculture is now possible. He hopes to eventually raise a $1 billion fund to invest in Chinese agriculture.
Hopu was formed by former Goldman Sachs partner Fang Fenglei, Goldman Sachs investment banker Richard Ong, and former KPMG chair Dominic Ho in 2008. Last year, it made investments in mobile phone and electronics manufacturer Xiaomi, as well as investment firm GIC, and technology venture capital and private equity investment firm DST Global.