Quick Take: Food Giant COFCO Looks to Shed Money-Losing Assets

(Beijing) — State-owned food giant China National Cereals, Oils and Foodstuffs Corp. (COFCO) is looking for buyers of some money-losing assets, as it moves toward adding employees and companies as shareholders in the national push to open up state-owned enterprises to the private sector.

COFCO has announced the sale of three subsidiaries over the past two weeks on the China Beijing Equity Exchange, including instant-noodle brand Wugudaochang, instant-food producer COFCO Jiangxi Natural Cereal Foods Co. Ltd. and grain and oil maker COFCO Tianhai Grain and Oil Industry Co. Ltd.

The packages include all or a majority of the companies’ equity, plus money owed to them by other parties.

Both Wugudaochang and Jiangxi Natural have been losing money since 2015. Although Tianhai made a profit in the first 11 months of last year, the group has failed to secure any buyers so far. The sales announcement was first made last December and has been updated twice, with lower prices offered in the most recent version.

It is COFCO’s latest move to adjust its equity and shareholding structure. In April, its finance arm, COFCO Capital Investment Co. Ltd., said it would raise 8 billion yuan ($1.16 billion) by selling stakes and issuing additional shares, thus introducing employees and private companies as shareholders.

Mixed-ownership reform of China’s state-owned enterprises (SOEs) started last year. The aim is to open government-owned assets to the private sector while improving efficiency, as employees, who will become shareholders, share profits and losses with their employers.

Some sectors, once dominated by SOEs, have also started the move toward mixed ownership, including telecoms and airlines. China United Network Communications Group Co., Ltd. or China Unicom and Air China Ltd. have announced that they are making progress.

Contact reporter Coco Feng (renkefeng@caixin.com)