Cofco teams up with Chinese fund to create global grains trader

Cofco, the Chinese state-owned grains trader, took another step in consolidating its recently acquired international businesses, creating a new holding company with China Investment Corp, the sovereign wealth fund.

Cofco said it had signed an agreement with CIC to create Cofco International Holding Company.

The state-run grain buyer will place its shares in Noble Agri - the agriculture joint venture with Noble Group of Hong Kong set up last year - as well as its stake in Dutch grains trader Nidera into the holding group.

The holding company, in which Cofco will hold 80.1 per cent and CIC 19.9 per cent, will provide a platform for an integrated international agricultural trader, which will compete with the agricultural "ABCDs" - Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus.

At an FT conference in Lausanne last month, Ning Gaoning, Cofco's chairman, laid out plans to turn the company into a publicly listed global powerhouse

He said he wanted Cofco to be an international company, adding that he planned to expand in North America, a big surplus grain producer.

Cofco this week reiterated its desire to "create an upstream, downstream integrated global agricultural products company".

The company also announced the appointment of Matt Jansen, a former executive at ADM, as the chief executive of Noble Agri.

Mr Jansen, who led ADM's global oilseed operations, will be based in Geneva, building up Noble Agri's trading operations. He is also expected to oversee the eventual integration of Noble Agri and Nidera under the Cofco umbrella.

The former ADM executive has extensive global experience as well as leading a large business unit under one of the leading agricultural traders that operate on the international markets, according to people who know him well.

Integration of Cofco's international trading assets will enable China to secure more grain from overseas markets directly, reducing its reliance on global agricultural traders who currently dominate commodity flows.

CIC's investment in the holding company also belies the country's desire to have more control on its food imports as rising incomes, richer diets and a shortage of arable land and clean water are expected to push up China's agricultural imports in future.

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