Chinese billionaire Haoyu Wang is in talks to buy control of Israeli irrigation systems company Netafim from Mexico's Orbia. Over the past year, Orbia has been in talks with various parties to sell its holdings in Netafim in order to reduce its leverage.

Negotiations for a deal to sell control of Netafim to Israeli private equity fund Fortissimo, managed by Yuval Cohen, failed, and now a senior source has confirmed to Globes that Orbia, managed by Sameer Bharadwaj, is examining the sale of its holdings to Wang, as part of a group of investors that he will join.

Wang currently lives in Maryland, US. He is of Chinese descent and has served as chairman of Dayu Conserving Water Group for the past nine years. This company, founded by his father, specializes, like Netafim, in drip micro-irrigation systems.

A leading Chinese manufacturer

Wang holds a master's degree in business administration from Johns Hopkins University. The company he heads designs, manufactures, markets, and installs precision irrigation systems for agriculture worldwide. It describes itself as a "leading Chinese industrial manufacturer with large-scale operations."

Dayu has plants in several centers in China, including Tianjin, and other regions of the country. The company was founded in 2000, and its shares are traded on a Chinese stock exchange, with a market cap of 5 billion yuan ($710 million). In the past, Dayu has spoken about establishing a representative office in Israel to identify irrigation technologies.

As far as is known, Wang has visited Israel in recent weeks as part of his investigations into buying control of Netafim. Orbia has an 80% stake in Netafim, which it wants to sell. The minority shareholders (20%) in Netafim are members of Kibbutz Hatzerim near Beersheva, which founded the company.

Orbia acquired Netafim for $1.5 billion in a company valuation. It is believed that Fortissimo was seeking to acquire the irrigation company for a valuation of $1 to $1.1 billion, but the deal did not go through. Now the final price tag in the deal may be higher.

Netafim is still considered the world's largest irrigation products company, in the field it founded called "precision irrigation", previously known as drip irrigation. The company was founded in 1965 on Kibbutz Hatzerim and is active in 33 countries worldwide. It owns 19 factories and two recycling factories and has 4,500 employees.

In recent decades, the competition Netafim has faced has intensified. Rivals include Rivulis, which acquired Israeli company PlastroGvat, which was later purchased and sold by Yishai Davidi's FIMI private equity fund, India Jain irrigation, which bought Kibbutz Naan's company, as well as many manufacturers in China. The irrigation market remains fertile ground for business potential, as only a few percent of farmers worldwide use drip irrigation. Most agriculture worldwide uses basic technologies for irrigation.