More foreign foreign investment into Canadian food production
In the second story of its kind today, a foreign group is working to secure stronger control of its food imports by investing further in Canada.
The SAUDI group now controls 38% of G3 Canada (what used to be called the Wheat Board). They now own 75% of the 50.1% G3 Holdings has in G3 Canada, which was split between them and Bunge.
Saudi Arabia’s SALIC boosts investment in G3 Canada grain company
WINNIPEG — Reuters
Published Friday, Jun. 17, 2016 2:45PM EDT
Last updated Friday, Jun. 17, 2016 2:47PM EDT
Saudi Arabia’s agriculture company has taken control of the majority investor in grain handler G3 Canada Limited, according to a filing, reducing Bunge Ltd’s stake and strengthening the kingdom’s efforts to secure food supplies.
G3 Global Holdings, the joint venture of U.S. agribusiness Bunge and Saudi Agricultural and Livestock Investment Co (SALIC), bought 50.1 per cent of the former Canadian Wheat Board in 2015 for $250-million ($194.22-million U.S.). It was renamed G3 Canada, with farmers accounting for 49.9 per cent of equity.
In two steps this year, SALIC, an arm of the state-owned Public Investment Fund, grew its stake in the joint venture to 75 per cent from 49 per cent, according to an April 28 Bunge filing.
“Any ownership changes that have happened within our company have not had any material impact on the organization itself, the operations or how we run the company,” G3 Canada Chief Executive Karl Gerrand said in an interview.
SALIC has “done a really nice job of allowing our team to operate as an independent Canadian organization,” he said. “For the most part, it’s been hands-off.”
He declined to comment on reasons for the ownership change.
SALIC converted $106-million in promissory notes into additional shares in the joint venture with Bunge on Feb. 1. This took its stake in the majority investor of Winnipeg-based G3 Canada to 65 per cent from 49 per cent, and reduced Bunge’s share to 35 per cent.
Bunge then exercised an option on March 30 to sell shares to SALIC for $37-million, bumping up SALIC’s ownership of G3 Global Holdings to 75 per cent.
The idea of SALIC increasing its investment has long been considered, Gerrand said.
SALIC could not be reached for comment. Bunge spokeswoman Deb Seidel declined to comment.
Saudi has been phasing out crop farming due to its intense water usage in the desert kingdom. SALIC has targeted investments in beef and eight key crops, including wheat. Canada is a major wheat exporter.
Farmers’ equity accounts for the same number of shares in G3, however its percentage of ownership has dropped because of recent investments by the SALIC-Bunge joint venture into the company, Gerrand said. He declined to give a current percentage.
G3 is building a grain terminal at Hamilton, Ontario and has received a permit for one at Vancouver, British Columbia. It is a small player compared to competitors Richardson International, Viterra Inc and Cargill Ltd.