By Lynda Kiernan
Bahrain-based alternative investment manager Investcorp announced a first close at $275 million for its Asia food brands investment platform.
Launched in November 2019, the platform was created in partnership with China’s Fung Strategic Holdings Ltd., a member of Fund Investments, the private investment arm of the families of Victor and William Fung who are the controlling shareholders of Hong Kong-based Fung Group, a global pioneer in global consumer goods and supply chains, and China Resources, one of the world’s largest food brand owners and distributors.
The fund, which is jointly managed by its three founding partners, has a specific geographic focus on China, Singapore, and greater Southeast Asia, where it will identify potential growth and market opportunities in Asia’s highly fragmented food sector, with particular attention being paid to branded condiments, packaged foods, and health snacks.
With 120 million households on pace to enter the middle class over the coming decade, China is the world’s largest and fastest growing consumer market set to offer a “once in a generation” surge in consumption, according to Investcorp.
Over the past three decades, the country has rapidly undergone a significant shift from being largely rural and agrarian to a more urban and market-engaged society. This rather jolting change has shifted food production away from fragmented smallholders and toward commercially-scaled industrial production.
Indeed, China’s food and beverage industries are set to see revenue amount to US$22 billion this year, and are expected to grow at a surprising CAGR of 13.8 percent per year to reach US$37 billion as soon as 2023, according to Statista.
“We are encouraged by the growth factors that we see in the food brand sector in Asia, which we believe offers attractive and defensive qualities in the current environment with consumers increasingly seeking access to trusted quality food products,” said Mohammad Alardhi, executive chairman, Investcorp. “We appreciate the support from our existing joint venture partners as we continue to progress this platform.”
Market conditions and growth prospects such as these have led to a recent surge in fund formation focused on China and its proximate regions.
In 2016, Matilda Ho launched Bits X Bites, the first food-focused venture capital fund and accelerator in China with a mission to invest in food tech startups situated along the entire food value chain from field to fork, in order to address the specific challenges faced in China’s food system.
That same year, David Liu, head of China and co-head of Asia private equity at KKR, and firm partner Julian Wolhardt announced they were leaving KKR at the end of the year to launch a new China-focused investment firm.
As two of the most senior executives with KKR, Liu and Wolhardt managed some of the firm’s largest investments. Both oversaw KKR’s first food investment in China in September 2008 – a $150 million investment in China Modern Dairy Holdings.
More recently, in October 2019, ABC World Asia, a geographically-focused impact investing firm launched in May of last year by Temasek Trust, the philanthropic arm of Singapore’s sovereign wealth manager Temasek, announced it had closed on US$282 million for a new fund focused on China, South Asia, and Southeast Asia.
“We believe there is strong market demand for defensive, resilient and growing investment opportunities in the current landscape,” said Hazen Ben-Gacem, co-CEO, Investcorp, and chairman of the fund’s investment committee.
“Along with our blue-chip partners in China Resources and Fung Strategic Holdings, we have deep experience in the food sector and we know the space well. We believe that investing in growing food brands in the world’s largest consumption market, and in one of the traditionally most defensive sectors, represents an attractive opportunity to enhance value for our stakeholders and communities while fulfilling a very important need in delivering quality, healthy, branded and packaged food products.”
– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.