Chinese investor takes majority stake in Kilcoy

Jon Condon, 03/12/2013


Speculation about the future ownership of the Kilcoy Pastoral Co export abattoir in southeast Queensland ended this afternoon with an announcement that a group led by Chinese-backed New Hope Investment Fund has acquired the business.

The announcement marks a significant transition in the make-up of foreign investment in Australian beef processing, seeing a return of Chinese investment in the sector for the first time since the China International Trust and Investment Corporation (CITIC) bought Metro Meats' South Australian and Western Autralian processing interests back in 1992. CITIC hastily exited the industry five years later, after poor financial performance.

New Hope Investment Fund is a Chinese-based investment fund with a strong focus on agriculture and food industries. The company is said to have interests in chicken and pork processing overseas, and is one of the largest lotfeeders in China.

The Kilcoy move is its first investment in beef, and its first in Australia, a contact said.

New Hope itself now owns the majority share in Kilcoy, with the remainder held by it new 'strategic partners'. None of the original shareholders in Kilcoy remain, with Elders' minority stake passing to the new joint venturers.   

Kilcoy, located about an hour north of Brisbane, is Australia’s fourth largest individual beef processing facility, employing 750 staff and processing more than 265,000 cattle a year. The factory has almost doubled in capacity since it was taken over by Harmony in 2007.

Over the past six years the plant has adopted a strategy specialising in grainfed beef, procured from a network of feedlots across southern Queensland and northern NSW.

This afternoon’s statement said New Hope and its strategic industry partners had extensive reach and presence in animal protein sectors in the Asia Pacific regions and brought both financial and industry resources.

Kilcoy Pastoral Company’s majority shareholder is Singapore-based PAG Managed Fund, which took over Singapore-based Harmony Capital Management’s Harmony Investment Fund share.  Harmony previously purchased KPC from the Kennedy family and other investors in 2007. Within days it also completed the purchase of Harvey Beef, WA's largest processor.

There has been no suggestion that New Hope Investment has also made an offer, or taken a share in Harvey Beef.  

In a statement issued this afternoon, KPC chief executive officer Dean Goode said the new ownership structure provided a solid foundation and strong industry support, which will enable KPC to pursue its next growth strategy.

“The new shareholders are committed to retaining KPC’s management team and staff, to reinforce KPC’s solid business model, and to provide strong supports for KPC to expand its product offering and market reach,” Mr Goode said.

“This is excellent news for our customers, for our feedlot partners, and also for our staff. We are determined to develop a growth strategy involving and benefiting all of our partners and stakeholders and to contribute to the success of the Australian beef industry,” he said.

Kilcoy Pastoral Co was established by local beef producer Damian Kennedy and other investors in 1953. His son Ian took over as managing director in 1965 and later pioneered the first consignment of chilled beef to Japan and developed Natural beef brands into Japan in 1999.

Kilcoy Pastoral Co has grown into one of the top four beef processing sites (as distinct from companies) in Australia, and the company’s distinctive diamond brand and grainfed product is renowned both domestically and internationally. 


Who is New Hope Investment?

New Hope Investment fund is China's largest animal feed producer. The company also has investments in pork and poultry processing in China, and is regarded as one oif the nation's largest lotfeeders. 

The listed entity launched an overseas agriculture fund in 2011 with international investors including Singapore's Temasek Holdings, New York-listed Archer-Daniels-Midland and Japan's Mitsui & Co.

"The investment will focus on agricultural products and related businesses overseas and in China," a spokesman said at the time of the fund launch.

New Hope is regarded as China’s largest privately-owned agricultural conglomerate. It operates a separate domestic agricultural fund, which in its first phase invested 1 billion Yuan (about A$165 million).

The domestic fund is built around the demographic shift in China’s population to urban areas, which is increasing demand for agricultural products at a time when domestic supply is decreasing.

“This provides opportunities for agricultural companies, like us," a New Hope spokesman said.

The price of pork, a staple food product in China, had become a key driver of inflation in China, and rising demand for the meat had also fuelled pork imports from overseas, including the United States.

New Hope in 2011 set up an overseas investment centre in Singapore to organise its investments in Southeast Asia, where it already operates ten animal feed plants and poultry farms. The group sold about 15 million tonnes of feedstuffs worldwide in 2011 and consumed about 10 million tonnes of corn, the company estimated.

"We plan to open 7-8 new plants each year overseas, instead of 3-4 a year in the past few years," a spokesman said.

New Hope’s longer-term plans are to establish feed mill plants and ‘farms’ in the Middle East, South Africa and Central Europe, in addition to Australia.




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