UBNZ Funds Management has pulled out of the running to purchase the Crafar farms, after it its bid failed the 'good character test' required by the Overseas Investment Office.

Receivers for the farms, KordaMentha say they now have a new offer to purchase the 16 North Island farms, from Shanghai's Pengxin International Group Limited.

"It's by far the best offer we have and it is now a matter of waiting for OIO approval," KordaMentha's Brendon Gibson said.

The Crafar farms went into receivership more than a year ago owing about $200 million to PGG Wrightson and the banks.

Pengxin International Group Limited's chairman Jiang Zhaobai said the company expects to lodge its application to purchase the properties, with the Overseas Investment Office, in March.

It would not be appropriate to release any details on the bid before detailed information had been given to the OIO, the company said.

"What we can say at this stage is that we believe we will bring substantial benefits to New Zealand, some of them, perhaps, outside the dairy industry."

The group, which employs about 4000 people, has total assets of about $US2billion with four business arms including property development, infrastraucture, mining and agriculture.

Hong Kong company Natural Dairy and its sister company, New Zealand-based UBNZ Asset Holdings, had their application declined by Cabinet ministers Maurice Williamson and Kate Wilkinson last month after its directors and frontwoman May Wang failed a "good character" test.

The company had already suffered a setback when Wang was bankrupted after her business group failed.

Gibson said KordaMentha wanted to give UBNZ every opportunity to consider the options available to them following last month's announcement.

However the agreement was now at an end, Gibson said.

Natural Dairy, via its PR representative Bill Ralston, refused to comment on today's announcement.