China’s COFCO, CIC to Form Joint Venture to Run Grain Businesses

COFCO, China largest grain trader, and China Investment Corp. (CIC), the country’s sovereign wealth fund, have formed a joint venture to be called COFCO International Holdings, which will control COFCO’s investments in Dutch grain trader, Nidera, and Noble Group Ltd.’s agribusiness unit.

The endeavor could serve as a vehicle to increase the CIC’s exposure to the agriculture sector, since the $653 billion fund has expressed interest in increasing its allocation to ag investments as a way to help the country gain a larger presence in the food industry.

Under the structure of the deal, COFCO will control an 80% stake in COFCO International Holdings, while CIC will own the remaining 20%. However, a consortium led by private equity firm Hopu, (which is backed by Singapore-state investor, Temasek Holdings), which partnered with COFCO as a minority interest holder upon the acquisition of Noble’s agribusiness unit, will now also be a unit in the new venture.

Noble, one of the biggest commodity traders in Asia has had its accounting methods brought to question this year after the previously unknown, Iceberg Research alleged that the company over-inflated the value of its assets by billions of dollars. Noble has consistently denied these accusations.

When contacted regarding the formation of COFCO International Holdings, Noble declined to comment, and Nidera was not available for comment. It is still unclear whether the new venture will affect the daily business of either Nidera or Noble.

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