By Lynda Kiernan

Navis Capital has acquired Malaysian durian producer Hernan Corporation with plans to invest US$95 million to fund expansion plans that include acquiring 10,000 acres for plantations. 

Founded in 1998, Navis Capital is focused on investments across Asian markets. The firm has a private equity team of 70 (one of the largest is Asia) that have executed more than 80 control transactions, and currently manages approximately US$5 billion in public and private equity capital from six offices.

Driven by the ever-growing demand for durian from China and overseas, Navis plans to invest US$95 million to help the company expand its production capacity for durian puree and paste, as well as high-value products such as mooncakes, ice cream, chocolate, and durian flavored confectioneries.

Furthermore, Navis Capital plans to partner with a local Malaysian agribusiness to acquire 10,000 acres suitable for durian plantations beginning in Pahang state. And eventually, intentions are to openly collaborate with other industry players, and to adopt and integrate ag technologies such as IoT to modernize the entire durian value chain and to raise the level of standards for the industry, according to Nicholas Bloy, co-founder and managing partner, Navis Capital.

These ambitious plans have been revealed seven months after Navis secured an investment of US$200 million from the Overseas Private Investment Corporation (OPIC), the development finance institution of the U.S. government, in support of Navis’ commitment to funding small and mid-sized companies across Asia. 

Hold Your Nose and Dive Right In

Malaysia and Thailand are the main global producers of durian fruit, which  looks like a cross between a pineapple and a hedgehog, and despite its very pungent smell, has been gaining market traction at an accelerated rate in recent years.

*An amusing aside: In April of this year a library in Australia was evacuated for a suspected gas leak that ended up being a rotting durian left in a cupboard. And the intense smell has also made it illegal to carry a durian onto trains, planes, or into taxis in Southeast Asia. 

This market growth has mainly stemmed from China, where the geography and weather make conditions unsuitable for the fruit’s cultivation, driving China to spend $1 billion on durian imports last year alone , and driving the global market to expectations of a value of more than $25 billion by 2030. 

Of this total, Malaysian durian exports to China are expected to top 1,000 tons of whole frozen fruit per month, contributing US$120 million to the country’s economy per year. 

Until recently, Thailand was the only country cleared to ship whole durian fruit to China, however, regulations have been recently amended giving Malaysia the same clearance, opening a channel that could see many rushing to gain a foothold in what is being called the “Durian Gold Rush”, and with good reason – as a single durian could fetch $100 in China. 

“Negotiations with China in the past few years have resulted in the opening of more commercial durian farms, thus giving a boost to production,” Malaysia’s agriculture minister Salahuddin Ayub told the South China Morning Post in June of this year. 

And although some environmentalists are concerned that an oncoming boom in durian production will lead to deforestation and loss of habitat, Malaysia’s deputy agriculture minister Sim Txe Tzin told NPR that the possibility to make more money growing durian will be beneficial in that it will take the pressure off of palm oil and rubber production – two crops that have long been at the center of environmental controversy. 

 

– Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.