ASIA – Leading agribusiness merchant, Louis Dreyfus Company (LDC) has announced that it will invest in Malaysian poultry and livestock feed company, Leong Hup International (LHI) ahead of planned initial public offering.
LDC said the investment is part of the strategy to diversify and expand overseas and strengthen its position in the feed, food and animal nutrition markets.
Established in 1978, LHI is seeking to list all of its shares on Bursa Malaysia with a goal to raise US$291 million in a scaled-down IPO in mid-May, according to Reuters.
LHI has developed an integrated livestock and feed milling model, with activities in Malaysia, Singapore, Indonesia, Vietnam and the Philippines.
Its portfolio also includes a branded processed food business and the IPO targets to support its intentions to continue to grow its integrated business model in newer markets, with a focus on expanding upstream operations.
“LDC’s cornerstone investment in LHI’s IPO is in line with LDC’s strategy to diversify further downstream and strengthen our footprint in growth markets by partnering with key players in the feed, food and nutrition value chain,” said Ian McIntosh, group chief executive officer at LDC.
Diversification with an eye on Asia
LDC, which trades in global agriculture, food processing, international shipping, and finance has identified a growth strategy that involves increased vertical integration, diversification through value-added products, as well as investments in innovation.
It targets regional presence through targeted investments, partnerships and joint ventures to accelerate growth.
A major part of LDC’s growth strategy has been in Asia, as it opened a new oilseeds processing plant in Tianjin in China.
Earlier, the company completed the acquisition of Sinarmas Natural Resources Foodstuff Technology (Tianjin) Co., Ltd., which owns and operates oilseeds crushing and refining facilities in China.
“The investment cements the rewarding commercial partnership that our two companies have enjoyed for many years,” said Thomas Couteaudier, head of LDC’s South and Southeast Asia Region.
“With poultry consumption in Southeast Asia continuing to grow, the backward integration of a livestock business like LHI provides better cost and quality control, as well as the opportunity for LDC to add greater value along the supply chain.
“This is an excellent fit and supports our mutual growth strategies in the region.”