Blackstone exited Chinese agricultural firm due to PR concerns

In March 2010, the private equity firm paid $194 million for around 10% of Dili as part of a consortium that took a 30% stake for around $600 million in what was supposed to be a pre-IPO investment, AVCJ reported. Other consortium members include Warburg Pincus, Capital International and Atlantis Investment. Blackstone sold the holding back to Dili in the first quarter of this year for a 16.5% premium on the buying price.

Consumer price inflation in China reached a three-year high of 6.4% in June, largely driven by a 14.4% year-on-year increase in food prices. As such, any agricultural company seeking to raise prices - especially one backed by a foreign investor - risks public opposition and regulatory punishment. Earlier this year Unilever was fined for announcing planned price rises. The government is particularly concerned about inflation because it is seen as a potential trigger for social unrest.

Warburg is still said to hold a $10 million interest in Dili while Capital International's ownership position is unclear. Blackstone's involvement is seen as more controversial because China Investment Corp. has made a substantial paper loss on a pre-IPO investment in the private equity firm, sparking public resentment.

It was reported that Dili, which owns the China Shouguang Agricultural Product Logistics Park in Shandong province, the largest trading and production hub for China's vegetable industry, planned to list in Hong Kong in 2010. The offering is apparently still stalled.

 

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• Topics
• Greater China
• Industrials
• Exits
• The Blackstone Group
• CIC
• Warburg Pincus Asia