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Saudi Arabia boosts stake in G3 Canada

G3 Canada
(Dave Bedard photo)

Winnipeg | Reuters — Saudi Arabia’s agriculture company has taken control of the majority investor in grain handler G3 Canada Ltd., 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 . 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 CEO 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 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.

SALIC could not be reached. 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.

Keith Degenhardt, a farmer and first vice-president of the Alberta Federation of Agriculture, was disappointed when foreign investors bought the former Wheat Board, but said any dilution of farmer equity is “not top of the mind.”

G3 is a small Canadian player compared to competitors Richardson International, Viterra and Cargill.

Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg. Additional reporting for Reuters by Maha El Dahan in Dubai.

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