Kohlberg Kravis Roberts & Co.
) recently headed a consortium to acquire a stake in COFCO Meat.
The latter is a subsidiary of COFCO Group - the largest food
processing, manufacturing and trading company based in China.
Notably, the financial terms and conditions of the deal were not
Further, as per a
report, the deal is worth $270 million, out of which Kohlberg
Kravis will pay an approximately $150 million for the stake. Other
investors included in the consortium are Baring Private Equity
Asia, Hopu Investment Management Co. and Boyu Capital. All the
three private equity firms are based in China.
What Prompted Kohlberg Kravis to Invest?
Kohlberg Kravis in collaboration with COFCO Meat intends to
establish large scale meat production and processing units in
China. Large scale operation facilitates the production process and
helps ensuring better food quality.
Food safety remains the major issue for the Chinese government, as
the country faced major food scandals in the recent past. It
involved food contamination ranging from the presence of industry
chemical like melamine in baby products to pork injected with
Moreover, though the Chinese economy has somewhat slumped as
compared with the steady growth witnessed during the period
2000-2010, the demand for staple food products like meat remains
relatively unperturbed. In fact as per US Department of Agriculture
and the China Animal Industry Yearbook, the country is unable to
keep up with the surging domestic demand for pork which comprises
over 50% of total global consumption.
Therefore, Kohlberg Kravis' latest plan to further expand into the
Chinese food industry seems a strategic fit, given the ever-rising
demand for healthy food in the country. Earlier the company had
invested in Ma Anshan Modern Farming Co. and Asia Dairy Holdings as
a part of similar food safety initiative.
Kohlberg Kravis currently carries a Zacks Rank #2 (Buy). Other
investment brokers worth considering include
Cohen & Steers Inc.
Woori Finance Holdings Co., Ltd.
Ameriprise Financial, Inc.
). While Cohen & Steers and Woori Finance sport a Zacks Rank #1
(Strong Buy), Ameriprise holds the same Zacks Rank as Kohlberg
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