Beijing-based Tsing Capital announced that it is establishing the Food and Agritech Fund, a new $1 billion capital fund designed to invest in downstream processing of high value products in the Australian food and agriculture sectors for the Chinese market.
This will be the ninth fund for Tsing Capital since the firm’s launch by founder and managing partner, Don Ye in 2000. The firm’s eight previous funds count investments totaling $1 billion from global institutional investors, including IFC Asset Management, FMO and energy giant, BP.
Ye announced he was fundraising for the Food and Agritech fund in partnership with Australian businessman, Charles Hunting with the goal of reaching a corpus of between $500 million and $1 billion. However, the fund may raise as much as $2 billion with the inclusion of loans.
When discussing the business model of the new fund, Hunting told Weekly Times Now, “We’re not creating the food products for the sake of hopefully getting that food into the Chinese market. The plan is to bring strategic Chinese investors who have distribution networks in China so that we can create an end-to-end opportunity that is demand driven, not supply driven.”
Over the past 18 months, trade and investment developments between China and Australia have created an advantageous landscape for funds such as this.
September 2014 saw the launch of the $3 billion Beijing Australia Agricultural Resource Cooperative Development Fund. This joint initiative between the Beijing Agricultural Investment Fund and Yuhu Agriculture Investment Pty Ltd. that was formed to invest capital into the Australian dairy sector with particular focus on infant formula, but also in beef, lamb, and other agricultural businesses, and also to supply Australian agricultural products and services to the Chinese market.
The launch of this massive fund “further positions Australia as a major destination for agricultural investment,” noted GAI News in 2015 – investment that is key for the future of Australia’s ag sector. Moreover, the ANZ Bank estimates in its Greener Pastures report that Australia will need an estimated $600 billion by 2050 for the country to maintain its current agricultural production levels.
Two months after the launch of the Beijing Australia Agricultural Resource Cooperative Development Fund, the completion of the China-Australia Free Trade Agreement (CHAFTA) was announced.
“China is Australia’s largest export market for both goods and services, accounting for nearly a third of total exports, and a growing source of foreign investment,” Julianne Davis, Acting Manager, Agribusiness and Food Investment at the Australian Trade Commission told GAI News. “As well as attracting greater investment in Australia, the China-Australia Free Trade Agreement will continue to reduce barriers to Australian agricultural exports over time between our two markets, across a range of products including beef, dairy, lamb, wine, hides and skins, horticulture, barley and seafood.”
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Lynda Kiernan