AgFeed sells chunk of its feed business
AgFeed Industries, one of the largest independent hog production and animal nutrient companies in China, announced the proposed sale to a maximum of 20% of its animal feed subsidiary via a listing and initial public offering of the subsidiary's common stock.
The IPO is anticipated to raise $20-25 million. Dr Songyan Li, AgFeed's chairman, stated "the IPO reflects our Board's desire to provide dedicated capital to our animal nutrient business to develop its presence in other segments of the animal nutrition market, specifically the compound feed and concentrated feed markets which together comprise 95% of China's expanding production."
He continued, "For a number of years our focus has been on additive pre-mix that represents 5% of the market. The offering will enhance the ability of our animal nutrition business to pursue strategic initiatives and growth, upgrade personnel, foster innovation and raise capital while relying on the wisdom and practical experience of the parent company."
Junhong Xiong, AgFeed's president, added: "Hog feed comprises 35%, or $20 billion of the $58 billion animal feed market in China. Most producers have an annual production capacity of approximately 10,000 tonnes. Our animal nutrition unit sold over 95,000 tonnes of feed in 2009 and we feel that the IPO is a great opportunity to position our animal nutrition business to pursue opportunities for organic growth and growth through acquisitions."
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