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Blackstone Leading Deal for Chinese Agro Company

HONG KONG/SHANGHAI  (Reuters) – A consortium led by Blackstone Group (BX.N) has agreed to invest about $600 million in a Chinese agricultural company ahead of its planned Hong Kong listing, sources with knowledge of the deal said on Wednesday.

China Shouguang Agricultural Product Logistic Park, one of the country’s largest agricultural market operators, will sell a roughly 30 percent stake of the company to the group led by the U.S. buyout giant for about $600 million, said the sources.

The investment marks Blackstone’s first pre-IPO type deal in China as Shouguang plans to raise about $700 million in a Hong Kong initial public offering in the middle of this year after receiving investments from the Blackstone-led consortium, the sources said.

It also became the second major investment in China for Blackstone, which agreed in September 2007 to buy a 20 percent stake in the major chemical maker China National BlueStar (Group) Corp for up to $600 million.
The BlueStar deal was approved by Beijing in early 2008.

The consortium includes Capital, Atlantis Investment and Warburg Pincus [WP.UL], said the sources, adding Blackstone is the lead investor with the biggest portion.
“This will be the last round of private capital-raising before the company goes public,” said one of the sources. “Blackstone is apparently interested in this type of Pre-IPO deal with private company as well as investment in state enterprise like BlueStar,” he added.

The sources spoke to Reuters on condition of anonymity because the deal was not yet public. Blackstone declined to comment, while Shouguang, based in northeast Chinese province of Shandong, could not be immediately reached for comment.

HOME OF VEGETABLES
Shouguang is a family-owned business and it has hired investment banks including UBS (UBS.N) UBSN.VX and BOC International, the investment banking arm of Bank of China, to advise on its Hong Kong listing, said the sources.

The company is named after Shouguang, the Chinese city known as the “Home of Vegetables” — a centre of trade in vegetables and other agricultural products, not only for major domestic customers but also for international agricultural markets.

Shouguang won approval in 2009 to expand its logistic park project, after which trading volumes of vegetables, fruits and agricultural by-products are expected to reach 10 million tonnes annually, according to a company statement at that time.

Blackstone became aggressive in China business after it hired Anthony Leung, a former Hong Kong Financial Secretary as its Greater China Chairman.

Leung has said the U.S. buyout would not slow its investments in China despite the global financial crisis, as high economic growth and low valuations promised good returns.

Blackstone currently is raising a local currency yuan-denominated fund with a target size of about $750 million, purely for China deals.

(Reporting by George Chen and Kennix Chim; Editing by Louise Heavens)