CHINA Investment Corp is among three large funds vying to take a stake in Australian dairy producer Van Diemen's Land.
The Australian reports executives from China's $US482 billion fund are due to visit Tasmania next month for further discussions over investing in the company, which is seeking to raise $180m to expand its milk production, the insiders said.
VDL chief executive Michael Guerin told The Wall Street Journal the company had signed agreements for three large funds to conduct due diligence, but declined to confirm whether CIC was among them.
All three have put in proposals featuring varying amounts of equity and debt, and he expects to finalise the deal by the middle of the year, he added.
CIC's interest in VDL comes as the Chinese sovereign-wealth fund, the fifth-largest in the world, scouts for more lucrative overseas investments tied to China's growth prospects.
The Wall Street Journal in November reported CIC has held talks with Fonterra Co-Operative Group, the world's largest dairy exporter, about investing in the New Zealand dairy giant's newly created shareholder fund.
That investment was expected to be less than $US100m as no single investor is allowed to hold more than 15 per cent of the shares.
A deal with VDL, which supplies Fonterra from its 24 farms, would allow CIC to take a more significant slice in the business, said a person with direct knowledge of the matter.
"Overall the Australia project is institutionalised enough to have more chance for CIC to get a significant minority stake," said the person.
Chinese companies are increasing their investments in Australia's farm industry as they seek to cash in on Asia's booming food demand and secure supply chains for the future.
Last year, Chinese investors won some of the most high-profile deals in the sector, including buying giant cotton farm Cubbie Station and the rights to develop the flagship Ord East Kimberly Expansion Project in Western Australia.
But their interest has sparked a backlash from some of Australia's conservative lawmakers, who fear such companies will sap the country's natural resources with little regard for Australia's ecology.
All investments by sovereign wealth funds are scrutinised by Australia's Foreign Investment Review Board, which could make it less attractive for CIC to invest in a relatively low-return business such as dairy, the person said.
But Mr Guerin said he has "no concerns" about problems with the FIRB as "those issues have already been walked through" before the due diligence agreements were signed.
Full report, The Australian
