China's Bright Food approved to buy stake in NZ's largest meat processor

WELLINGTON (Reuters) - New Zealand approved on Tuesday the sale of a 50 percent stake in the country’s largest meat processor Silver Fern Farms to a unit of China’s Bright Food Group [SHMNGA.UL], enhancing the South Island-based company’s access into the Chinese market.

The approval of the NZ$261 million ($191 million) deal is an encouraging outcome for Chinese investors, following a high-profile rejection and complaints over the slow approval process.

The Dunedin-based company had voted in October to allow Shanghai Maling Aquarius Co 600073.SS, a unit of Chinese state-owned enterprise Bright Food Group, to take a half-share in the firm and applied for approval from foreign investment regulators the same month.

Minister for Land Information, Louise Upston, who approved the deal after it received the go-ahead from the Overseas Investment Office (OIO), said in a statement it would “put the company in a better financial position and allow it to increase its exports”.

Silver Fern Farms Chairman Rob Hewitt told Reuters the capital invested would allow the company to develop its brand and strategy.

The company is particularly focused on the China market, their biggest by volume, and can take advantage of Bright Foods’ supply chains and 8,000 Chinese supermarkets.

“It’s the fastest growing protein market in the world so it’s going to bring significant benefit,” Hewitt said of Bright Foods’ involvement.

Shanghai Maling President Wei Ping Shen said in a statement the regulatory approval “clears the way for us to move ahead with the partnership”.

Chinese companies have in recent years been attracted to New Zealand’s agricultural sector as the Asian giant seeks sources of high-quality protein to feed its fast-growing middle class. However, some Chinese investors have hit roadblocks from political opposition to foreign ownership of domestic assets.

In September 2015 the New Zealand government blocked the NZ$88 million purchase of a local farm by China’s Shanghai Pengxin, despite the OIO approving the sale. The government said at the time they were not satisfied there would be “substantial benefit” to New Zealand.

Investors have also complained the OIO process was slow and uncertain, a problem the government acknowledged in May when it announced plans to speed up approvals by employing more staff.

Neighboring Australia has also grappled with concerns around foreign ownership of farmland and rural businesses.

Early this year, the government rejected a bid by a China-led consortium to buy Australia’s S. Kidman & Co, the country’s largest agricultural land owner, concluding the offer for Kidman and its agricultural land, about the same size as Ireland, was not in the national interest.

Reporting by Charlotte Greenfield; Editing by Jacqueline Wong