SALIC ups stake in Canadian grain JV to 75%

Saudi government-owned agri specialist has increased its holding in G3 Global Grain Group by buying Bunge shares.

State-owned Saudi Agricultural and Livestock Investment Company’s Canadian subsidiary has increased its stake in G3 Global Grain Group to 75 percent for $143 million, according to Securities and Exchange Commission filings.

The joint venture’s other partner, agribusiness Bunge Canada, now holds a 25 percent stake in the company, according to its Q1 financial report.

SALIC Canada held a 49 percent stake in the joint venture when it was formed in 2015, having invested C$250 million ($195.2 million; €172.6 million). It then bought more than half of Bunge’s shares in separate $106 million and $37 million February and March acquisitions.

SALIC was established in 2011 to make agri investments in overseas companies and land, and is part of a wider initiative to encourage Saudi agri companies to take strategic stakes in foreign agribusinesses. It is owned by the Public Investment Fund of the Kingdom of Saudi Arabia (PIF).

G3 has been expanding as the Saudi government seeks to secure grain for its water-depleted country. When the JV was formed, it bought a 50.1 percent stake in the Canadian Wheat Board from the Canadian government, and re-branded it G3 Canada Limited. Remaining shares, held by a trust for Canadian grain farmers, can be bought out by G3 in 2022.

In April Saudi crown prince Mohammed bin Salman announced the kingdom would continue to acquire foreign agri assets as it seeks to diversify its oil-dependent economy. In 2008, Saudi Arabia abandoned a decades-old quest for agricultural self-sufficiency in favour of a strategy targeting resource-rich foreign agribusiness sectors.

In January, SALIC bought a 20 percent stake in Brazilian beef producer Minerva for $188 million.

A paper published this year by Canadian agri investment manager Bonnefield said cultivated forage crops in Canada present a growing opportunity for investors as demand from export markets begins to rise. China and Saudi Arabia were earmarked as two key export markets.