Thoughts on the Reform of State-owned assets of Cofco Water Integration of 11 listed companies

Although the pilot scheme of the state-owned capital investment company of Cofco Group Co., Ltd. (COFCO) has not been made public, the relevant reform strategies, objectives and directions have basically surfaced.

A few days ago, according to a management person of Cofco, as early as the first half of this year, the pilot scheme of Cofco's state-owned capital investment company has been completed, and its core content is to start with the diversification of equity. While introducing all kinds of capital, such as industry, fund, private capital, foreign capital, etc., through the realization of the internationalization of the whole industrial chain, the split listing of business plates, the introduction of professional managers and other methods. To build Cofco into a state-owned capital investment company with grain, oil and foodstuffs as its core business.

Economic Observer Cofco Tunhe, alcoholic wine and other listed enterprises have learned that at present, Cofco Group has begun to split and integrate some of the listed enterprises.

For example, in the sugar business, both Cofco Tunhe and Huafu Group, owned by Cofco, have sugar business, but Cofco Tunhe is the largest beet sugar producer in the country. Cofco's next plan is to integrate the sugar business of Huafu Group into Tunhe in Zhongliang. in the liquor industry, Cofco attaches great importance to the alcoholic liquor acquired last year, and is currently planning to use it as a platform to acquire Hunan's Xiangjiao liquor industry. expand the liquor market.

The aforementioned Cofco management told the Economic Observer that now, the State Council has announced the overall plan for the reform of state-owned enterprises, which has put forward relatively clear definitions and requirements for state-owned capital investment companies. It is expected that within this year, Cofco will announce the completed pilot scheme of the state-owned capital investment company, and at the same time speed up the pace of the introduction of non-industry capital and the spin-off listing of the business sector.

Cofco management told the Economic Observer that before SASAC confirmed the pilot enterprises for state-owned capital investment, Cofco had basically formed an investment company structure with cereals, oils and foodstuffs as its core business. In fact, Cofco International is the embryonic form of the state-owned capital investment company. Cofco International is registered abroad. Next, with the help of this comprehensive international agricultural investment and trading platform, Cofco will be transformed into a publicly listed "global agricultural company".

Introduction of capital

SASAC announced the first batch of six state-owned enterprise reform pilot enterprises in July 2014, when Cofco and the State Development and Investment Corporation were positioned as state-owned capital investment company pilot enterprises.

Prior to this, Cofco and CIC had jointly established Cofco International, and with the help of this international investment platform, Cofco successfully controlled Nedra and Noble Agriculture in February and April 2014, respectively. This groundbreaking transnational acquisition of Cofco in domestic grain and even the whole agricultural field is a typical state-owned capital investment behavior, which has played a decisive role in selecting Cofco as a pilot enterprise of the state-owned capital investment company.

A Cofco management official told the Economic Observer that for the current state-owned enterprises, the most important thing to carry out state-owned capital investment is to introduce all kinds of non-industry capital. In this regard, Cofco has been exploring for many years. For example, in 2009, Cofco joined hands with Hopu Fund to acquire a 20.03% stake in Mengniu Dairy for HK $6.1 billion, making it its largest shareholder. In May 2013 and February 2014, Cofco partnered twice with France's Danone Group to form a joint venture, making Danone the second largest shareholder in Mengniu Dairy. In this way, Mengniu, the main body of the enterprise, has realized the coexistence and common development of various forms of ownership. Before and after Cofco became a pilot enterprise of the state-owned capital investment company, Cofco introduced a number of strong foreign funds one after another. In June last year, Cofco Meat, in cooperation with KKR and Baring Asia, invested 270 million US dollars to build a large-scale pig breeding plant and meat processing plant in China. In August last year, I bought a net to introduce IDG and Saifu funds and completed financing of 100 million US dollars for the expansion of Cofco's fresh cold chain and other related links.

It is reported that after years of investment cooperation, Cofco and Hopu Fund, Temasek, Standard Chartered Private Equity Investment and other large international investment institutions have formed long-term strategic partners. In the investment in Cofco Meat, as well as the acquisition of Nidra, Laibao Agriculture and other international enterprises, Hopu Fund is involved in the investment.

From the establishment of Cofco International to the successive acquisition of two international agricultural giants, in fact, Cofco has basically formed an investment company structure with cereals, oils and foodstuffs as its core business, with the shape of a state-owned capital investment company. It is reported that in terms of introducing capital in the future, Cofco will use mixed ownership as the main means of allocating resources, and vigorously introduce strategic investors of other forms of ownership, such as industrial capital, social capital, and private equity, in its subordinate enterprises. speed up the pace of summing up the pilot experience of state-owned capital investment companies.

The Cofco management told the Economic Observer that, in fact, the pilot program for Cofco's state-owned capital investment company was completed in the first half of 2015. Its core content is to take Cofco International as the investment platform, while introducing all kinds of non-industry capital, through measures and measures such as realizing the internationalization of the whole industrial chain and the split listing of business plates, we will promote Cofco to become a state-owned capital investment company with grain, oil and foodstuffs as its core business as soon as possible.

Listing as a whole

After the acquisition of Nedra and Laibao Agriculture last year, Ning Gaoning, chairman of Cofco, said publicly that Cofco planned to complete the integration of domestic and foreign assets in 2017 and list its main business as a whole by 2019.

The integration of domestic and foreign assets mentioned by Ning Gaoning mainly refers to the integration of Cofco's domestic grain, oil and sugar assets with foreign Nidra and Noble agricultural assets; the so-called overall listing refers to Cofco International as a platform. Cofco Group, which integrates domestic and foreign assets, has been transformed into a publicly listed "global agricultural company."

At present, Cofco has a total of 11 listed companies, including holding and equity participation. the scope of business covers planting and breeding, agricultural products collection, storage and logistics, grain, oil and food trade, agricultural products processing, feed processing, slaughtering and meat processing, real estate, hotels and so on. In the pilot project of the state-owned capital investment company, Cofco has an important task, that is, to split and integrate the existing listed companies according to different business sectors, and after completing the split and listing of the industry sector, can begin the pace of listing of the group as a whole.

In terms of business spin-off and listing and the introduction of professional managers, the goal of Cofco is also very clear. The "spin-off listing" is to reorganize and list Cofco's 11 existing listed companies according to different business sectors and adopt the method of "merging similar items". The introduction of professional managers is focused on international management talents. For example, Matt Jansen, chief executive of Cofco Laibao Agriculture, appointed by Cofco in May this year, previously served as a senior vice president in the ADM Group of the United States.

In terms of equity diversification, Cofco has tried to reform mixed ownership in its Cofco Meat Investment Co., Ltd. (referred to as Cofco Meat Investment Co., Ltd.) and I Buy Network, and won praise both inside and outside the industry. Last year, Cofco and CIC, which is in charge of US $500 billion in assets, jointly established Cofco International Holdings Limited (Cofco International), which successfully controlled the acquisition of Nedra in the Netherlands and Noble Agriculture in Hong Kong, which was affirmed by senior officials of the State Council.

Cofco is positioned as a "global agricultural company" in the future. in building an international industrial chain, Cofco already has relatively complete large-scale logistics facilities in South America, and the next market is close to the United States.

Cofco management told the Economic Observer that in the next step, Cofco will adopt the method of "merging similar items" to split and integrate 11 listed enterprises roughly according to the categories of grain and oil, food, real estate, finance, and so on. If you add in the group's overall listing plan, this will be a very huge project.