Peter Cimmet, Managing Director
Olympus Capital Holdings Asia, LTD
By Dan Emerson
Olympus Capital Holdings Asia is a middle-market, private equity fund, established in 1997. Olympus has invested in approximately 30 portfolio companies in China, India, Japan and Korea. Agribusiness is one of its target industries, along with manufacturing, business services, environmental services and financial services.
Peter Cimmet, managing director at Olympus Capital Holdings Asia, LTD, spoke with Global AgInvesting.
GAI: Why did Olympus Capital Asia decide to focus on Asia?
Olympus: In developed economies, people think about agribusiness private equity as an attractive asset class, but returns are typically lower than those that traditional PE firms target. But, we believed we could achieve very attractive returns in this sector in Asia and have demonstrated this.
GAI: What have been some of Olympus' agribusiness investments in Asia?
Olympus: Our successful investments in this space include Arysta LifeScience, which has a global footprint in 120 countries. We invested $450 million in equity in Arysta. Other deals have included investments in a Chinese vegetable company called China Minzhong, a palm oil plantation in Indonesia, a potash mine in Thailand; and an animal feed business in China. Most of what we do has been in Southeast Asia and China. When it comes to agribusiness, India is also an important part of the business. We have local teams on the ground in all of those places.
GAI: When Olympus Capital Asia invests in an agribusinesses company, how involved does the firm become in management?
Olympus: We do everything from minority to full-control investments. In Asia, we are generally a minority investor; often, the founder does not want to give up control. But we like to be actively involved in a company. Generally, we own 20 to 50 percent; even at the lower end, we negotiate a number of different governance rights. Our goal is not to dictate, but to add value.
GAI: How has the investment environment in Asia changed since the firm was founded in 1997?
Olympus: It's become much more competitive. There are many more PE firms doing business there, now. Also, there are more companies in Asia that have the scale necessary to invest in. Most of our investments range from $25 million to $100 million per deal, although some of them can go much larger. We had $450 million in equity invested in Arysta. In the past, there weren't so many targets large enough to invest that kind of capital.
GAI: What trends are you seeing in agriculture and ag investing in Asia today?
Olympus: Each country is different, but one thing that ties everything together is emergence of the middle class, with more people moving to urban areas. Changes in agribusiness have created new investment opportunities. One of those is that people have more money to spend and they spend it on better quality, safer food. And, preferences have changed – more protein, more processed foods and snack foods, and more casual dining-out. Also, as the middle classes have developed, we often see more people moving from the countryside into the cities. When so many people move out of the rural areas, the way farming is done has to evolve because they don't have as many people. That has created new opportunities for doing corporate-scale farming, and improving productivity.
GAI: Do you see any challenges to the continuing growth of the agribusiness sector in Asia?
Olympus: It depends on the country. The sub-sector may well slow down once the middle class has stabilized. But, our biggest challenge is not on the macro level. The toughest part is finding companies that can execute well, where the management teams have the right governmental structure and mindset to work with private equity firms. But we are finding more and more entrepreneurs are recognizing the benefits that private equity can bring.
GAI: How has the Chinese stock market downturn impacted your investment strategy in Asia?
Olympus: The downturn in the stock market is likely to create more investment opportunities, as many companies that were planning IPOs will be delayed and will turn to private equity to fund their growth plans. Regarding the overall economy in China, it is slowing down. Therefore, PE investors need to be more selective in which food and agribusiness sub-sectors and companies they target for investment.
GAI: What's next for Olympus Capital Asia?
Olympus: We are actively in the market deploying capital, very much in the mode of looking for new investments. You'll see us be very active in food and agribusiness in China, Southeast Asia and India. We've been spending a lot of time working to develop deals in those areas.