Brazilian farmland group set for HK listing

“There is a shortage of farmland in China itself,” says Adrian Fu. (Photo courtesy of Asia Tatler)

Financial Times | 18 July 2010

By Tom Mitchell and Robert Cookson in Hong Kong

A farmland development group backed by Jacob Rothschild is hoping to become the first Brazilian company to list on the Hong Kong stock exchange, after attracting investments from some of the territory’s largest tycoons.

Agrifirma Brazil purchases scrubland and transforms it into agricultural land. The company has raised $179m to date, including investments from two Hong Kong tycoons – Raymond Kwok and Adrian Fu – and Lake House, an investment group.

“There is a shortage of farmland in China itself,” said Mr Fu, a hotel developer. “Eventually China will have to go abroad to source crops.” The Kwok family controls Sun Hung Kai Properties, Hong Kong’s largest property developer.

Ian Watson, Agrifirma Brazil’s London-based chairman, said: “The wealth in the developing world is going to cause foodstuffs to go up in price.”

He noted that Brazil had 14 per cent of the world’s freshwater resources, while China’s populous northern provinces and cities were perennially parched. “When you export agriculture you are exporting water.”

Mr Watson last week met investment banks, Hong Kong stock exchange officials and regional sovereign welfare funds, including China Investment Corp. Last year, CIC paid $856m for a 15 per cent stake in Noble Group, the Hong Kong commodities trader, in a deal highlighting China’s preoccupation with food security.

Agrifirma Brazil hopes to raise another $100m-$200m before launching an initial public offering next year. “The markets got a little in the way in 2008 and 2009, but now we are ready to proceed,” said Charles Brown, a Lake House director who sits on Agrifirma’s board.

Agrifirma Brazil has acquired 60,000 hectares of land in Bahia province and plans to increase its land bank to 100,000 hectares ahead of an IPO. The company spends approximately $2,300 to acquire a hectare of scrubland and transform it into farmland.
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