Planting the seeds of a global dream

ALAN WOOD
Last updated 05:00 08/03/2014

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Agribusiness

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Alan Lai, the Chinese chairman of PGG Wrightson, speaks carefully in English about his aspirations to grow the New Zealand rural services firm into a "global seeds company to compete with our rivals".

Those rivals include biotech and chemicals multinational Monsanto. Lai suggests eventually the board of the NZX-listed firm will have extra directors representing other continents outside Asia and be "like a Monsanto".

Lai's investment vehicle Agria Corp has a 50.22 per cent holding in PGW.

For the moment Lai is concentrating on rebuilding PGW from a period of struggle dating back to 2008/09. He now wants to make a bridgehead into China from PGW's seeds operations in Australasia and South America.

He emphasises his international approach to business, including his own travels and graduating from Melbourne's Monash University with a Bachelor of Business degree having moved to Australia for education at the age of 21.

That led to work as a professional accountant first with KPMG, then with another of the big firms, Price Waterhouse.

The number crunching background has led to investments, including what he sees as a rescue of PGW when the company was in financial trouble.

"We have spent huge money to rescue the company in 2009. Without (Agria) I believe PGG Wrightson would be gone," he says.

Lai took over the chairmanship of PGW last year, drawing a host of questions from shareholders on the floor of the company's annual meeting wanting assurances that Lai and the other Asian members of the board could help take the company forward.

Appointing a Chinese chairman was a first for a New Zealand agricultural company.

At the meeting PGW chief executive Mark Dewdney pointed to China as being second only to Australia as a trading partner for New Zealand but being a long term "five year, 10-year" play for PGW.

Lai believes Agria can deliver a strong result in the financial year to June 30, 2014.

"We spent a huge amount of money investing in PGG. The money was 100 per cent coming from Agria itself, no borrowing . . . [up until] today we have invested more than $260 million into PGG."

He points to some of the previous financial period losses by Agria as being a result of writedowns of the PGW investment following a restructuring of the Kiwi business.

Lai tells The Press in an interview that he travels on a Singaporean passport and spent time in that country from 1991 to 1996.

From 1997 he returned to Hong Kong and China, having been born and raised in Shenzhen. He transferred with Price Waterhouse, then left the firm to look for investment opportunities with business partners. He looked into the agricultural sector from 1999. "We were probably one of the few pioneers to go into China to really see opportunities. We brought in lots of good ideas and practices into China, we helped and invested in a lot of companies in China."

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Agria was formed with five people in 2007 with Lai one of the founders. He says he has stuck with the company while the others have left following a move to the New York Stock Exchange.

"They couldn't believe they could make a success of a business like that, so they lost their vision." He calls the company the "first" Asian agritech business listed in the United States.

In China, Agria has its own seeds operations in different types of corns, brassicas and vegetables, with around 250 research and technical staff in the development of new strains. "We would really hope (knowledge within PGW) can be commercialised in China.

The majority Chinese shareholder of agricultural services firm PGG Wrightson has reported a turnaround first half net profit of US$1.76 million (NZ$2.08m) saying it has refinanced bank debt and is in a stronger financial position.

Agria Corp said the profit for the six months to December 31, 2013 came after a first half loss of US$60.2 million in the prior fiscal year.

The financial results included the consolidation of its controlling interest in NZX-listed PGG Wrightson.

- BusinessDay

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