Brazil’s BRF to Invest in Cofco Meat IPO, Form Partnership

  • BRF to invest $20 million in China pork producer’s share sale
  • Cofco seeks to expand into processed meat through BRF tie-up

BRF SA, Brazil’s biggest producer of processed food, plans to invest $20 million in Chinese pork producer Cofco Meat Holdings Ltd. and form a strategic partnership.

Sao Paulo-based BRF said Tuesday in a statement it will buy shares of Cofco Meat in its initial public offering, which is expected in Hong Kong on Nov. 1. Cofco Meat, which is part-owned by KKR & Co., is seeking to raise as much as $333 million from the share sale, according to terms for the deal obtained by Bloomberg on Monday.

BRF and Cofco Meat signed an accord to strengthen strategic cooperation, according to the statement. The partnership will help Cofco expand into the processed meat market and allow BRF to sell more products in China, said a person with knowledge of the matter, who asked not to be identified. Cofco and BRF have agreed to seek opportunities to collaborate as well as exchange information on management practices, according to the person.

BRF joins other food companies developing Chinese partnerships to expand in the world’s most populous country. Danone SA, owner of the Activia yogurt and Evian water brands, agreed in 2013 to spend 325 million euros ($357 million) to form a joint venture and invest in China Mengniu Dairy Co., China’s biggest dairy producer.

Cornerstone Investor

A Hong Kong-based external spokeswoman for Cofco Meat declined to comment of the accord with BRF.

State-backed Cofco Meat is offering 975.6 million shares at HK$2 to HK$2.65
apiece in its IPO, Monday’s terms show. Chinese home-appliance maker Haier Group Corp. agreed to buy $57.4 million of stock as the biggest cornerstone investor in the offering.

KKR, Baring Private Equity Asia, Hopu Investment Management Co. and Boyu Capital bought stakes in Cofco Meat in 2014, according to a pre-listing filing with the Hong Kong stock exchange. Hopu sold its interest in the company last year to Singapore state investment firm Temasek Holdings Pte, the filing shows.

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