Hony in $113m China farm machinery deal

The investment is part of the $340 million joint acquisition with Hony's portfolio Zoomlion Heavy Industry Science and Technology, a Chinese construction equipment maker. Two parties bought a combined 80% stake in Chery, of which 60% was purchased by Zoomlion for RMB2.09 billion, Chery Heavy said in a statement.

The move is driven by Changsha-based Zoomlion's ambition to diversify its core business from manufacturing construction machinery to farming equipment.

Chery Heavy, which makes seeding machines and harvesters, reported a net profit of RMB90.7 billion last year, a more than five-fold increase on 2012, according to a filing. It is expected to benefit from China's plans to raise agricultural productivity and improve food safety.

According to the Development Plan for Agricultural Machinery Industry, the agricultural machinery industry sector will be worth RMB400 billion in 2015 and exceed RMB500 billion by 2018.

Hony first invested in Zoomlion in 2006. Two years later, Zoomlion, supported by Hony, Goldman Sachs and Mandarin Capital Partners, bought a 60% stake in an Italian concrete pump manufacturer CompagniaItalianaFormeAcciaio (CIFA) for EUR163 million ($215 million). Hony committed EUR108 million to the Chinese company's overseas acquisition.

The PE investors have fully exited the Zoomlion CIFA subsidiary to the parent company.

Hony oversees approximately $7 billion of assets under management. The firm focuses on the consumer, advanced manufacturing, healthcare and services and energy sectors, as well as cross-border investments. Domestically, it invests predominantly in Chinese state-owned enterprises (SOEs), having committed around RMB14 billion to 31 SOEs over the past decade.

Last month, Hony bought restaurant chain Pizza Express from UK-based private equity firm Cinven Partners for GBP900 million ($1.54 million). The investment came from its fifth US dollar-denominated fund, which has a corpus of $2.35 billion and is now over 50% deployed.

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• Topics
• Greater China
• Industrials
• Buyouts
• Hony Capital
• China
• M&A
• manufacturing
• buyout