August 29, 2007 -- On August 15, Citigroup Venture Capital International signed an agreement of strategic cooperation with Guangxi Yongkai Sugar Co., Ltd. in Nanning, Guangxi.

According to the agreement, Citigroup Venture Capital will invest 378 million yuan (US$50 million) in Guangxi Yongkai Sugar to ensure that the sugar firm is listed on the Hong Kong Stock Exchange, while obtaining a 20 percent share in Guangxi's of sugar magnate.

"In a very short period, Guangxi Yongkai Sugar Industry has become the leading company in the sugar industry in Guangxi, and all over China," Gordon Clancy, the president of Asia-Pacific Citigroup Venture Capital, said in a statement. "We are surprised by such a high-speed development and have confidence in their future. We are happy to cooperate with them, which is a milestone for both of us."

"Listing in an overseas market had been our aim for a long time. We are very glad to gain international investments with the assistance from Citigroup Venture Capital International," Xiaohui Cheng, spokeswoman of Guangxi Yongkai Sugar Industry, told Emerging China.

According to Clancy, Citigroup Venture Capital expects to help make the arrangement work by buying other companies to expand the scale of production.

"We are looking forward to getting support from the government of Guangxi," Clancy said.

According to the of Guangxi's Bureau of Statistics, the local sugar industry's revenue reached 1.9 billion yuan (US$252 million) in the first half of 2007, making sugar the industry with the biggest earnings in Guangxi.

Some experts believe that the sugar industry in Guangxi faces problems.

"The competitiveness of the sugar industry in Guangxi is still limited," Min Li, a senior consultant at Drozak Consulting GmbH, told Emerging China. "The limited land resources and high planting costs are the sugar industry's current weaknesses." But Li also believes that things will get better.

"The investment situation is very good in Guangxi at present," said Li. "The international giant, Citigroup Venture Capital International, support for Yongkai Sugar is appropriate and timely. This event should benefit both sides, creating a good model to gain ground for inland enterprises of the sugar industry in China."

"We have worked on the negotiations for the agreement for over one year," said Cheng, "and we have received 248 million yuan (US$33 million) of the total investment, the first part of the investment from Citigroup Venture Capital International." Cheng was unable to give a precise date for the listing.