Carlyle to invest in CP Group's China feed operation
Carlyle Asia Partners III LP, a US$2.55 billion pan-Asian investment fund, is to invest US$175 million in convertible preference shares and options in CP Pokphand Co (CPP), one of China’s major animal and aquafeed producers. The deal, which is expected to close by July 22 2010, will give Carlyle 11.3% of CPP.
The Asset Magazine reports that CP Group plans to use part of the proceeds from this transaction to prepay before the end of 2010 approximately USD150 million of the intercompany debt of approximately US$288 million which is outstanding to CPP.
"We believe that China’s feed industry, driven by the change in demographics and government policies, is at a point where the industry will be more stable, and in turn, will favor the responsible, experienced and leading producers such as CPP. We look forward to contributing our expertise and experience to CPP through our participation on the board,” the magazine quotes Patrick Siewert, senior director of Carlyle as saying.
It is expected that as meat consumption in China grows along with its rate of disposal income, the demand for animal and aquafeed products will also increase. The feed industry is also undergoing consolidation as the Chinese government strives to improve food safety standards through tougher licensing standards and monitoring systems, and as a result increases control over the whole food chain, which starts at the feed level.
