BEIJING and HONG KONG, June 6, 2014 – COFCO Meat, a leadingintegrated pork company with a focus on providing safe meat products to Chinese consumers,and a consortium of investors composed of KKR, BaringPrivate Equity Asia, HOPU, and Boyu, announced the formation of a strategic partnership.The consortium will invest in COFCO Meatalongside existing shareholdersto build andmanage large-scaleindustrialized hog farms and meat processing plants in China. Terms of the transaction were not disclosed.
COFCO Meat, a subsidiary of COFCO Group,is a modern industrialized and integrated food company engaged in hog and poultry production, processing, distribution, and meat imports and exports.Established less than five years ago, COFCO Meat is now one of the largest hog producers in China. The large-scale and integratedoperations enable effective quality control to produce high-quality meat products to address increasing food safety issues in China. The company markets its fresh meat and processed meat products under the brandsJoycomeandMaverick.
According to the USDepartment of Agriculture and the China Animal Industry Yearbook, China accounts for more than 50% of global pork consumption, while large-scale farms with an annual output of 50,000 or morehogscontribute less than 1% of the total domestic supply. Large-scale farms are expected to increase more than six fold by 2020 given their food safety andquality control capability, as well as theirgreater operational efficiency compared with smaller farms.
NingGaoning, Chairman of COFCO Group, said:“Meat is the single-largest food categoryin China’sdiet, and meeting this demandis a critical link and a natural extension of our company’svalue chain. Chinese consumers demand of COFCO to promote the meat industry and provide safe meat products. Bringing in the four strategic investors is an action by COFCO to diversify our equity ownership and enhance our corporate governance. We look forward to creating synergies among the shareholders to improve the operations and management of COFCO Meat, and together grow COFCO Meat into a much bigger actor in China’s meat industry. ”
Ma Jianping, Vice President of COFCO Group and Chairman of COFCO Meat, said: “Thisstrategic partnership brings infour world-class investment funds tosupport COFCO Meat’s development. The investment is a recognition of our past achievement and future potential, andwe believe these investors’ extensive global networks, professional local teams and deep operationalexperience will accelerate COFCO Meat’s strategic goal to become the leading provider of China’s safe meat products.”
“COFCO Meat is the right partner for the consortium with its strong commitment to food safety, leading market position and outstanding historical track record,” said Julian Wolhardt, Member of KKR.“We look forward to fully utilizing our global resources and local expertise to assist COFCO Meat in setting the bar for food safety in China. This new investment will increase the supply of high-quality meatproducts in China as the country witnesses an increasing demand for healthier food.”
Guy Cui, Managing Director of Baring Private Equity Asia, commented, “The investment in COFCO Meat is an excellent example of the consortium's ability to invest in a diversified-ownership structure and support an important policy imperative to provide consumers with better food quality and safety. We look forward to working with the management team at COFCO Meat and contributing to its future growth and development.”