CMIA, China Merchants complete China Farm take-private
CMIA Capital Partners and China Merchants Holdings have completed the privatization of Singapore-listed agriculture machinery manufacturer China Farm Equipment (CFE), following an investment of $23 million.
According to a regulatory filing, the buyer group's offer was accepted by more than 90% of shareholders at the end of January, triggering a compulsory takeover. The buyer group includes CFE's parent, China Longzhou Technologies, which already owned 87% of the company. Shuping Wang, CFE's founder, chairman and CEO, is working in partnership with CMIA and China Merchants.
CFE manufacturers farm equipment including combine harvesters, rotary plow machines and components, and soil tillage devices, as well as air and water cooling diesel engines. The company sells products domestically and also exports to Vietnam, Myanmar, Thailand and Bangladesh. CFE is best known for its Dragon Boat brand.
The company announced a net profit of RMB8.1 million ($1.3 million) for the third quarter of 2012, down 58% year-on-year, as revenues fell 20% to RMB126.9 million. Income was down 36% at RMB23.2 million for the first nine months of the year.
"The farming equipment space is a fast-growing sector in China and will benefit from China's drive to accelerate the modernization of its agricultural sector," said Lee Chong Min, managing partner at CMIA. "CFE is a leading agriculture machinery manufacturer in China with an experienced and proven management team, a well-known brand, an established distribution network and a resilient R&D effort."
Citing Ministry of Agriculture figures, Jinhong Zhu, investment director at China Merchants Technology Holdings, noted that China's agricultural machinery sector has posted compound annual growth of 25% over the past four years. The country's 12th Five-Year Plan, which outlines policy direction for 2010-2015, forecasts the sector will grow from RMB280 billion to RMB400 billion.
CMIA's investment was channeled through its fourth private equity fund, which launched in 2011 with a target of $150 million. It focuses on investments in China's agriculture, agribusiness and food sector.
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