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COFCO investment arm closes $1bn mixed-ownership deal

The package includes a $271m commitment from China’s Hony Capital as well as pledges by Guangdong Wen's Foodstuff Group and Beijing Capital Agribusiness Group.

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The package includes a $271m commitment from China’s Hony Capital, as well as pledges by Guangdong Wen’s Foodstuff Group and Beijing Capital Agribusiness Group.

COFCO Capital Investment, a unit of state-owned agriculture holding COFCO, has received 6.9 billion yuan ($1.03 billion; €885 million) from a group of strategic backers.

An entity incorporating the new investors has been established in a move intended to “improve [COFCO’s business model] in a market-oriented direction,” a spokeswoman told Agri Investor. She declined to elaborate on the strategy.

New investors include Beijing-based buyout group Hony Capital, which committed $271 million. Shenzhen-listed Guangdong Wen’s Foodstuff Group and state-owned Enterprise Structural Adjustment Fund have both invested 800 million yuan and Beijing Capital Agribusiness Group also took part.

The move aims to bolster COFCO’s international presence. In August, the company’s trading arm formed a partnership with Illinois-based co-operative Growmark in a bid to complement its exports with the ability to source US grain.

The transaction comes as China is injecting private capital into state-owned enterprises in an attempt to make them more competitive. COFCO’s 18 other subsidiaries are also in the process of attracting private funds, with some earmarked for public listings.

Kalliope Gourntis contributed reporting.