Hony buys China farming business for $113m

The firm has acquired a 20% stake in China’s Chery Heavy Industry

Hony Capital has made a RMB 696 million ($113 million; €85 million) investment in farm equipment manufacturing company Chery Heavy Industry, taking a 20 percent stake in the business, a Hony spokeswoman confirmed to Private Equity International.

The firm partnered with Zoomlion Heavy Industry Science and Technology, the two taking a combined 80 percent for RMB 2.78 billion.

Hony has joined the growing number of private equity investors tapping China’s farming industry for investments, as the country works to improve its food quality and safety.

In Juny, Kohlberg Kravis Roberts, Baring Private Equity Asia, Hopu Investments and Boyu Capital, created a strategic partnership with COFCO’s pork and poultry subsidiary, COFCO Meat, to build and manage large-scale industrialised pig farms and meat processing plants in China.

Financial details of the investment were not disclosed, but a source close to the deal told PEI that the total deal value was $270 million, with KKR investing $150 million and the other firms making up the balance.

Similarly in June, Yunfeng Capital and CITIC Private Equity Funds Management, agreed to invest at least RMB 2 billion in a subsidiary of Inner Mongolia Yili Industrial Group, a dairy-related product developer – with dairy and meat being a primary focus for investors.

Hony has been ramping up its activity in other sectors too, recently. In July, the firm closed the $3 billion take-private of US-listed Giant Interactive, a transaction led by Baring.

The same month, Hony acquired well-known UK restaurant chain Pizza Express for $1.5 billion from Cinven-owned restaurant operator Gondola Group in a cross-border transaction, expecting to expand the chain across China, PEI reported earlier.