(Adds background on Shineway sale, CDH Investments.)
By Ellen Sheng
Of DOW JONES NEWSWIRES
HONG KONG -(Dow Jones)- Goldman Sachs Group Inc. (GS) agreed to sell half its stake in Chinese meat processor Shineway Group to Chinese private-equity fund CDH Investments for about US$150 million, a person familiar with the deal said Wednesday.
Goldman and CDH formed a consortium in 2006 to acquire Shineway, also known as Shuanghui Group, for CNY2 billion, or US$250 million at exchange rates at the time. After selling its stake, Goldman's holding in Shineway will fall to around 5.5%, the person said.
Goldman's success in acquiring a stake in Shineway came as a surprise after a lengthy regulatory approval process. Approval was slow in coming because Goldman already held a stake in China Yurun Food Group Ltd., a major Hong Kong-listed producer of chilled and frozen pork in China and a competitor to Shineway.
One of the bidding guidelines excluded major shareholders of companies in the same industry.
Despite that hurdle, Goldman was able to beat out other bidders including CCMP Capital Asia, a Hong Kong-based buyout fund that had been courting Shineway for more than a year.
This isn't the first time Goldman has exited part of its investment in Shineway.
In October 2007, Shineway's listed unit, Henan Shuanghui Investment & Development Co. (000895.SZ), said Goldman reduced its stake in the consortium that owns Shineway to 46% from 51%.
CDH Investments was set up in 2002 by the former private-equity group of China International Capital Corp. The firm recently raised US$750 million for its fourth private-equity fund, which is targeting US$1.4 billion.
-By Ellen Sheng, Dow Jones Newswires; 852-2832-2336; ellen.sheng@dowjones.com