BINDAREE Beef’s capital raising program has settled on a Chinese partner not only prepared to inject $140 million into the local integrated beef business, but with an address book of 20,000 business customers back in China.
Shandong Delisi Food Company was the successful bidder in a worldwide quest by Bindaree to find investors to support an ambitious growth program.
In Delisi, which will take a 45 per cent stake in Bindaree, the Australian company has a found a business soulmate - one that services 700 million people.
Delisi is one of the largest pure-play pork processors in the world’s largest pork-consuming country, Bindaree’s chief financial officer James Rogers said. That complements Bindaree’s own very recent status as a pure-play beef processor.
That has changed rapidly over the past few months as the Inverell, NSW, processor morphed into an integrated beef supply chain with a rapidity that indicates considerable forethought.
In July, Bindaree merged with meat marketing and distribution company Sanger, closely followed by the $25 million purchase of Myola feedlot at North Star.
“The merger with Sanger allows processing integration with sales, and the acquisition of the feedlot gives us a level of control over our beef supply,” Mr Rogers said.
“The JBS’s, Cargills and Nippons of the world have significant backing. Our view was that in order to have a secure business capable of growing, we needed to have an integrated beef business, one that was well capitalised to allow the growth we’re aiming to achieve.”
The capitalisation offered by Delisi is “one of the last pieces of the puzzle” - although Mr Rogers indicated that completing the integration puzzle is just the beginning of Bindaree’s growth ambitions.
Delisi’s huge address book should go a long way towards supporting those plans.
The pork specialist is awake to the future growth of beef as a protein source in China, Mr Rogers said, and it was looking for an alliance with a reliable supplier of quality Australian beef to supplement its pork offering.
Delisi’s $140m injection will be mostly spent around Bindaree’s Inverell plant. “There are technology changes in freezing, chilling and boning which we are looking to upgrade, and that will allow us to improve our yield and efficiency.”
While Bindaree will explore “upstream and downstream” investment opportunities, it has no immediate plans to diversify away from beef, Mr Rogers said. “We’ll stick to our knitting.”
He credited the Australian Government’s determination to open up market access in China as playing a valuable role in the Bindaree-Delisi alliance.
“Over the past 18 months we’ve been involved in a number of trade delegations led by Andrew Robb and Barnaby Joyce. That and the free trade agreement has allowed us to understand more about the Chinese market, and we understand from our Chinese partner that it has given it the confidence to make this investment because it sees that both governments are very supportive.”
The agreement was signed in China at the weekend, although it is subject to Foreign Investment Review Board approval.
If the deal goes ahead, Bindaree Beef will have a valuation of just under $400 million.
Matthew Cawood
National writer for Fairfax Agricultural Media.
National writer for Fairfax Agricultural Media.
