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Carlyle injects $15m in Chinese fertilizer maker

The global buyout firm has acquired a 16.5 percent stake in China Agritech and may increase its stake if the company does not meet an agreed net income target this financial year.

Global private equity major The Carlyle Group has invested $15 million for a stake of approximately 16.5 percent in China Agritech, a fertilizer company.

China Agritech develops, makes, and distributes liquid and granular organic compound fertilizers across 28 provinces in China. The bulk of the company’s operations are in Harbin, northeastern China, and it is listed on the Nasdaq Stock Exchange

Carlyle’s investment takes the form of about 1.4 million shares in the company and warrants to buy up to an addition 928,514 shares. As part of the deal, if China Agritech does not meet a net income target of $11.5 million this fiscal year, Carlyle will be issued additional shares and the warrant exercise price will be reduced.

China Agritech closed trading yesterday at $15.21 on Nasdaq, falling from $18.2 the day before.The company's highest closing price was $20.72 and its lowest was $13.42, 30 days before the announcement.

The growth investment will be used to expand the business and for working capital. It also gives Carlyle a seat on the company’s board.

The investment was made out of Carlyle Asia Growth Partners IV, which closed on $1.04 billion this June. Three months earlier, it invested $20 million for an undisclosed stake in Ellassay, a Chinese women’s fashion house. The fund invests across all sectors in China, India, Japan and Korea. Its predecessor closed on $668 million in 2006.

Carlyle is currently in the market with its third Asian buyout fund, having raised a little over $2 billion towards its reported target of about $3 billion. It is also raising its second Asian real estate fund, which is targeting $1 billion.

Carlyle was unavailable for comment at press time.