Chinese buyout firm Hopu and Singapore wealth fund Temasek have bought US$247 million (RM790.4 million) worth of shares in China Yurun Food from the pork producer and distributor’s controlling shareholder, a source said, in a move aimed at tapping the country’s booming consumer market.
Willie Holdings, the controlling shareholder of Yurun, one of China’s largest pork distributors, is selling 166 million of its shares at a 9 per cent discount to Yurun’s closing price yesterday, netting HK$3.96 billion (RM1.63 billion).
Hopu Investments, run by Chinese dealmaker Feng Feng Lei and former Goldman banker Richard Ong, has taken up US$167 million worth of the shares, a source close to the deal said.
Temasek has bought US$60 million worth of shares and its investment arm, Seatown, has taken up worth US$20 million, the source, who declined to be identified because of the sensitive nature of the deal, said.
Yurun did not identify the investors in the share placement. Hopu declined to comment, while Temasek and Seatown were not available for comment.
Hopu was one of two Chinese entities that invested about US$800 million in July for a 20 per cent stake in China Mengniu Dairy. Mengniu was one of the Chinese dairies found to have sold milk containing melamine during the 2008 tainted milk scandal, a discovery that sent its shares down nearly 70 per cent.
A month before Hopu’s deal for Mengniu, private equity firm Kohlberg Kravis Roberts & Co. completed a series of investments in Ma Anshan Modern Farming Co Ltd, a leading dairy farm company headquartered in China’s central Anhui province.
Private equity and investment firms have, for the past several years, tried hard to put money into China’s booming consumer sector, though, surprisingly, few of these deals have been completed.
Seatown is run by Richard Ong’s brother Charles Ong, who was previously Temasek’s chief strategist.
The investment in China Yurun is now one of several deals connecting the Ong brothers.
While Charles was at Temasek, the fund and Hopu bought a stake in Iron Mining International, an iron ore producer.
Temasek and Hopu were also among the buyers for Bank of America’s US$7.3 billion stake in China Construction Bank in May.
The stake of Willie Holdings, which is selling the 166 million China Yurun shares at HK$23.88 each and will buy 90 million new shares on completion of the sale at the same price for US$277 million, will be reduced to 29.98 per cent on completion of the transactions from 36.14 per cent now.
China Yurun said it will use the net proceeds to expand its production capacity.
Morgan Stanley and UBS are the share placement agents.
China Yurun shares fell 10.5 per cent to a four-week low of HK$23.50 this morning. They trimmed the losses to trade at HK$24 by midday.
The shares had risen 14.13 per cent from the start of 2010 through yesterday’s close, bucking a 1.65 per cent drop in the broader market.