Private equity group, KKR & Co., has acquired a ‘significant minority stake’ in leading Chinese aquatic feed company, Yuehai Feed Group Co. Ltd. KKR’s regional China head, Julian Wolhardt, reportedly told Bloomberg that the purchase was made through its China Growth Fund for $100 million.

 

Located in Guangdong, Yuehai Feed Group produces feed and nutrition solutions for shrimp and seawater fish farming operations, and is the largest manufacturer of high-end special aquatic feed products in the country based on market share, according to China Feed Industry Yearbook.

 

Seafood consumption in China has been growing faster than any other form of animal protein, according to the Food and Agriculture Organization of the United Nations. But despite this growth, consumption in China is still trailing consumption in neighboring countries at 35 kilograms per person per year compared to more than 50 kilograms per person per year in Japan and South Korea.

 

In line with the growth trajectory, Yeuhai has seen growth of 20% per year, driven by an increase in domestic demand for fish. But this higher demand comes as China is also imposing tighter food safety, quality, and environmental regulations across the industry. Under the country’s new Food Safety Law and Environmental Law, effective this year, the use of raw fish in aquatic feed will be restricted in aquatic feed, as will the use of antibiotics. The use of more environmentally friendly equipment and production practices will also be required.

 

As these industry upgrades are being implemented, Yeuhai aims to capture opportunities for growth including shifting from raw frozen fish and traditional pellet feed to more modern, advanced, floating puffed feed that offers higher conversion efficiency and is more environmentally friendly.

 

“Yuehai is the leader in the high-end special aquatic feed industry, and is well positioned to grow and capture new opportunities,” said Julian Wolhardt in a company press release. “We have been impressed by Yuehai’s leading technology, innovative practices and extensive expertise in the feed space. With KKR’s deep knowledge and experience in China’s agriculture and food sector, I am confident in our collective ability to provide high-quality products to an increasingly discerning customer base.”

 

The purchase of the stake in Yeuhai is KKR’s fifth investment in a Chinese company that is playing a role in advancing China’s food safety and security, according to Wolhardt. Other food industry leaders in which KKR has invested include Modern Dairy, Asia Dairy, COFCO Meat, and Sunner Development.