October 28, 2014

China’s massive state-run grain trading company, COFCO is planning an initial public offering (IPO) that could take up to three years to complete and which will include the trading and agro assets of Nobel Group and Nidera which were acquired earlier this year.  In recent years Chinese state-run companies have been focusing on investing in overseas agricultural and agribusiness targets as China’s food demand and imports have been growing faster than expected.  With the goal of linking grain production in South America and the Black Sea region with markets in Asia, COFCO bought a 51% stake in Nidera in February followed by the purchase of a 51% stake in Noble Agri Ltd for a combined price of $3 billion.  COFCO has made other agri-acquisitions over the past recent years.  The company’s wine division bought Chile’s Biscottes and France’s Chateau Viaud in 2010 and 2011, and earlier this year formed partnerships in pork production with private equity giant KKR & Co. and in dairy with France’s Danone SA.  The Noble and Nidera deals were the largest in China’s food industry and closed COFCO’s seven year campaign of overseas expansion.  COFCO has stated that its combined revenues after the deals now total $63.3 billion after a full-year revenue total for 2012 of $34 billion.  If calculated on an annual basis, this places COFCO as bigger than Bunge Ltd, but still ranking behind Cargill and Archer Daniels Midland (ADM).

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