PARIS: Commodity giant Louis Dreyfus Company (LDC) is to invest in the stock market flotation of Asian poultry and food company Leong Hup International, adding to a shift down the food chain after it also joined a share offering by China's Luckin Coffee.
LDC, one of the world's biggest crop merchants, has said it wants to increase its presence in food processing and has cited regional partnerships as a way to expand.
Malaysia-based Leong Hup International on Thursday launched an initial public offering (IPO) that aims to raise as much as 1.2 billion ringgit ($290.31 million), saying it had secured 10 cornerstone investors, including LDC.
An LDC spokeswoman declined to comment on the potential size of its investment in the IPO. A source familiar with the deal said the cornerstone investors would each have less than 5 percent of the capital.
Leong Hup is one of the largest fully integrated producers of poultry, eggs and livestock feed in Southeast Asia, and also operates in Indonesia, Vietnam, Philippines and Singapore.
"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," Louis Dreyfus Chief Executive Ian McIntosh said in a statement.
The move marks LDC's first investment in livestock production and would build on its activity as a supplier of bulk animal-feed ingredients, the spokeswoman added.
McIntosh said in March that LDC had formed a joint venture to produce fish feed at an oilseed processing factory in China that it took over last year.
LDC will also buy a stake in Luckin Coffee Inc as part of a U.S. IPO planned by the Chinese chain.
The investment via a private share placement is related to a joint venture to build and operate a coffee roasting plant in China.
LDC, often known as Dreyfus, is the 'D' of the so-called "ABCD" quartet of global crop merchants, which also include Archer Daniels Midland, Bunge and Cargill.
The majors have all been expanding in food processing and ingredients in the face of declining margins for buying and selling crops.
LDC is among the trading houses which have suffered from a depressed sugar market, and this month announced a new chairman for its loss-making Brazilian sugar subsidiary Biosev. - Reuters