China asset firm invests in Beingmate

One of China’s four national asset management companies has signed a strategic co-operation with Fonterra’s troubled partner Beingmate and is poised to become an investor via the company’s controlling shareholder.

Beingmate announced the deal with Great Wall in a notice to the Shenzhen Stock Exchange, while also saying that it plans to offload its 51 per cent stake in the Darnum milk powder plant in Australia, which it bought from Fonterra under a joint venture arrangement.

The news comes as Fonterra reviews its offshore assets, including its Beingmate stake. The co-operative has hired Goldman Sachs to review its shareholding in the Chinese infant formula company.

Great Wall was founded by the Chinese Government to help cushion the impact of the Asian financial crisis by taking bad loans off the books of China’s largest banks. Since 1999, it has acquired, managed and disposed of more than RMB 1 trillion of nonperforming assets of financial institutions such as Agricultural Bank of China, Industrial and Commercial Bank of China and other commercial banks.

Beingmate said Great Wall would provide a suite of services to help improve the company’s core competitiveness including asset restructuring, equity investment and debt restructuring. It also said its controlling shareholder, Beingmate Group, intends to transfer some of its listed company shares to Great Wall, which could see it end up with more than 5 per cent of Beingmate.

However, no formal agreement has been signed between the parties.

Whether that fits in with any exit strategy Fonterra may be looking at is unclear, although analysts in China have speculated the Kiwi cooperative could find a way to sell its stake to Chinese government investors.