Hony Capital buys 20% stake in Chery Heavy Industry for $113.3m

Hony Capital, the private-equity firm backed by Legend Holdings, said it bought a 20 percent stake in Chinese farm machinery maker Chery Heavy Industry Co Ltd for 696 million yuan ($113.3 million), seeking to profit from the Chinese government's drive to modernize its farm industry.

Hony's stake was a part of a joint acquisition with its long-term partner Zoomlion Heavy Industry Science and Technology Co Ltd. Zoomlion and Hony said in a statement on Wednesday that they had bought a combined 80 percent stake in Chery for 2.78 billion yuan.

China is seeking to increase agricultural productivity and improve food safety, and its plans for large-scale rural modernization are expected to grow the agricultural machinery industry sector to a total output of 400 billion yuan and exports of $12 billion by 2015.

"We are optimistic about the growth potential of the farm machinery segment," Hony managing director Cindy Chen told reporters at a briefing on Wednesday. "Also, we've worked with Zoomlion before."

Hony teamed up with Zoomlion for the buyout of Italian concrete machinery maker CIFA in 2008. The private equity firm has taken stakes in more than 30 State-owned firms, investing over 14 billion yuan over the past decade.

Hony is among the best known of China's private-equity firms, and is an active investor overseas. The firm entered into a deal in July to buy Britain's Pizza Express chain for about $1.5 billion.

Hony has invested in sectors from heavy equipment to renewable energy and film and entertainment.