Investcorp, the Bahrain-based firm that counts Mubadala Investment Company as its biggest shareholder, launched a private equity fund with Chinese partners targeting $500 million (Dh1.84bn) of deals in the Asian food industry.
It joined forces with state-owned China Resources and Fung Strategic Holdings, a member of Hong Kong-based Fung Investments, to launch the fund, which will be the first dedicated platform targeting Asia’s food industry. The fund will focus on markets in China, Singapore and greater South East Asia, Investcorp said in a statement issued on Thursday.
"Investcorp has been actively growing our presence in Asia as part of our strategy to expand and diversify our global reach and offerings," said Hazem Ben-Gacem, co-chief executive of Investcorp.
"We are investing not only in what we consider to be the world's largest and fastest growing consumer market, and in one of the most defensive sectors, but also in partnership with some of the most respected entities in China," he added.
With 120 million Chinese households set to become middle class consumers over the next decade, China offers huge potential in domestic consumption growth, the company said. This trend is supported by Chinese millennials spending more money seeking premium and healthier brands, it added.
The fund will focus on capturing opportunities within China’s fragmented food industry, Investcorp said, and will support fast-growing businesses with high margins and also premium brands in niche sectors such as condiments, packaged food and healthy snacks.
The three founding partners have already signed an initial funding agreement of $300m and expect to close the first deal within the next four to six months. A Reuters report stated that about a dozen investments are expected to be made over the next five years.
Investcorp's experience in the food sector across four continents and Fung Group's knowledge of both export trading and supply chain management drew China Resources to the deal, according to Carl Qin, chief executive of China Resources Capital Management.
“Their unique experiences give us confidence that we have the right partners in our quest to address a significant [food] market opportunity,” said Mr Carl.
Investcorp, in which Abu-Dhabi-headquartered Mubadala has a 20 per cent stake, already has a partnership with China Everbright that focuses on technology investments. The pair jointly manage the China Everbright New Economy Fund 1 and said on Wednesday they are exploring the prospect of setting up a successor fund.
