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Wens issues convertible bonds
Posted on Friday, 26 June 2020 07:43
Wens Food is raising as much as CNY 9.88 billion (USD 1.40 billion) from a sale of convertible bonds that Zephyr, the M&A database published by Bureau van Dijk, shows is the sixth largest announced in 2020 to date.

Interestingly, four of this exchange securities issues targeted companies based in Asia Pacific, with the other two were by Southwest Airlines of the US and Delivery Hero of Germany.

The Chinese livestock breeding and production company intends to use proceeds for projects related to its pig, chicken and water fowl operations amid changes within the industry.

Beijing is promoting the transformation of animal husbandry from traditional farming methods into a large-scale, ecologically and environmentally-friendly, efficient and safe sector.

Scaled-up enterprises are better equipped to deal with the large amount of waste water and waste generated from pig breeding and to control the risk of disease so higher quality meat makes it to the market.

According to the prospectus, China’s broiler industry has been increasing in recent years and is expected to continue on the same trajectory as large-scale enterprises expand further.

There were 19.00 million broiler farms in the country in 2017 and, of these, only 292,080, representing 1.5 per cent of the total, were big enough to have annual sales of 2,000 or more.

With regards to hog breeding, China’s pork output reached 42.55million tones in 2019 and, since 2000, has always accounted for more than a half of the country’s entire meat consumption market.

However, prices are volatile as this farming category is fragmented and the production cycle is lengthy.

Wens is working on establishing a business model where it owns the land and fixed assets while farmers are responsible for breeding and fattening.

Once the broilers and hogs reach a certain age, the company collects the commercially-viable animals for the next stage in the cycle.

© Zephus Ltd