Dong Nai, 17 August 2011— Thai conglomerate Charoen Pokphand Group has sold 71 percent of its stake in animal feed manufacturer CP Vietnam to Hong Kong-based Charoen Pokphand subsidiary CPP in a deal worth 609 million USD, CP Vietnam confirmed on Aug. 15.
However, the deal is attracting controversy for transferring the control of a major player in the feed industry outside the region.
Vissan Ltd General Director Van Duc Muoi told the Dau tu (Vietnam Investment Review) that Vissan was concerned about the deal, since CP Vietnam already cornered most of the domestic market for agricultural materials used in producing animal feed.
“The infrastructure of Vietnam ‘s livestock industry is weak, and the domestic animal feed market in particular is under the control of foreign companies, including CP Vietnam,” Muoi said.
However, CP Vietnam General Director Sooksunt Jiumjaiswang Lerg said that the deal simply represented the transfer of capital within the group’s managment scope.
“Selling our stake to CPP Hong Kong is to easily mobilise capital for business expansion, as the Hong Kong-based company is listing shares on the Hong Kong stock market,” Lerg said.
CP Vietnam previously raised extra capital by borrowing from its Thai parent company. “However, as the demand for investment by CP Vietnam has grown quickly, we need to be able to raise more capital through the stock market,” Lerg said.
CP Vietnam accounts for 20 percent of the total domestic market share in the feed industry. It also provides 5 percent of the nation’s pork, 40 percent of processed chicken and 50 percent of chicken eggs. It has planned to expand its production to other products with the aim of establishing a new plant each year. The company is currently building a food processing factory in Ha Noi before completing one more in the south.
