SAUDI ARABIA – Brazilian food processor BRF SA, has formalized the creation of a joint venture with the Halal Products Development Company (HPDC), a subsidiary of Saudi Arabia’s Public Investment Fund (PIF), for an endeavor involving halal poultry production.

According to an announcement on the BRF investor relations webpage, BRF and the Halal Products Development Company, will begin implementing the formalities to incorporate a legal entity in Saudi Arabia.

The terms of the agreement call for BRF to own 70% of the soon-to-be-announced entity, while the PIF subsidiary would own the remaining 30%.

Signing the deal, BRF Chief Financial and Investor Relations Officer, Fabio Luis Mendes Mariano, assured that the Brazil-based meat and poultry company would keep the market informed about any relevant matter related to the present announcement.

BRF said the main goal of the JV will be developing the halal meat industry in the region, referring to food that must be produced according to Muslim dietary requirements.

The venture’s formalization comes days after SALIC, a wholly owned subsidiary of PIF, acquired a 10.7% stake in BRF through a follow-on share offering as part of Saudi Arabia’s long-term goal to secure food security for the Kingdom.

As part of the JV, BRF said it will set up a Halal Business Headquarters, a Halal Food Innovation Center and a Center of Excellence at a location yet to be determined.

The joint venture has been in the works for roughly a year and a half, as BRF initially announced the two entities’ intent in January 2022.

The intention to set up the JV had been communicated in October 2022 aiming to support the nation’s halal chicken production expansion target.

The agreement was executed through BRF’s German-registered subsidiary, BRF GmbH, and HPDC which is wholly owned by the kingdom’s sovereign wealth fund, the Public Investment Fund (PIF).

While some details of the transaction were still subject to regulatory and internal approval, the new business in Saudi Arabia will be a fully integrated poultry company.

With a total investment of US$500 million, it aimed to produce and sell fresh, frozen, and processed chicken products. Of the total, 25% was to be paid by the two parties on the incorporation of the joint venture, and the balance according to an investment plan is still to be finalized. 

Also set to be established as part of the agreement were a Halal Headquarters, a Halal Food Innovation Center, and a Center of Excellence in Saudi Arabia. 

As well as boosting national chicken production, the new entity aimed to also support greater competition in Saudi Arabia, reports Gulf Business. 

By 2025, Saudi Arabia aims to achieve 80% self-sufficiency in poultry production. This target was set to reduce the nation’s reliance on imports, as well as to support its knowledge and technology resources.

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