CHINA Minzhong Food Corporation yesterday said that its substantial shareholders have confidence in its prospects, despite recent share transactions.
In a recent response to a query by the Singapore Exchange (SGX) on the stock's substantial price fall, the company noted the sale of shares by two substantial shareholders - Olympus Leaf Holdings which entered into a sales and purchase agreement to sell 40 million shares to JP Morgan (SEA) and High Focus International Limited (HFIL) which sold 5.78 million shares in the open market. HFIL is 28.7 per cent owned by CMIA China Fund II.
In a statement yesterday, Lin Guo Rong, executive chairman and chief executive of China Minzhong, noted that it is natural for private equity firms to liquidate their investments, post-IPO, and return capital to investors.
He added that apart from the recent placement of 40 million shares, Olympus had not sold any shares since the company's IPO in April last year.
The company added that Olympus, along with board representatives from GIC and CMIA, continue to express confidence in China Minzhong's prospects.
GIC is currently China Minzhong's largest shareholder, with a total stake of 16.92 per cent, while Olympus holds 10.28 per cent and CMIA 6.53 per cent.
GIC declined to comment when contacted.
Lee Chong Min, managing director for CMIA Capital Partners, said: 'We feel China Minzhong is very attractively priced. We have been divesting our stake slowly not because we're not optimistic, but because as a fund, we have a certain fund life, anywhere between five to 10 years. Some of the earlier funds that we managed are approaching the end of their fund life. So we do have to divest. But that divestment has nothing to do with our view of the company.'
China Minzhong's shares took a sharp dive in active trading on May 12. The counter closed at $1.66, down 6.74 per cent, prompting the SGX query. Separately, the company yesterday announced the successful commencement of operations at its new king oyster mushroom cultivation facility in Tianjin City, which will allow it to double capacity to eight tonnes per day.
The company targets to increase its total king oyster mushroom cultivation capacity to 15 tonnes per day by the end of 2011 and to 24 tonnes per day by the end of 2012.
The stock closed trading at $1.61 yesterday.