Germany’s Evonik Expands Ag VC Reach with Investment in Hosen Capital Fund III

February 6, 2017

Germany-based animal nutrition and industrial solutions business, Evonik, announced it has made an undisclosed investment in Hosen Capital Fund III as a means of expanding its venture capital activities in Asia.

With Evonik’s product lines and services being tied into animal nutrition and global food production, the company notes that the tie-up with Fund III is a deal of “direct business relevance,” and one that will provide Evonik with access to agtech startups focused on agriculture and nutrition in China.

“Our strategic involvement in the Hosen Capital Fund III gives us access to partnerships with innovative technology start-ups in the Chinese agriculture and nutrition industry, resulting in essential impulses for further business development,” noted Emmanuel Auer, head of Evonik’s Animal Nutrition Business Line.

Although Evonik declined to disclose the scale of its investment in Hosen Capital Fund III, it did state that it plans to invest a total €100 million (US$107 million) in innovative technologies and specialized venture capital funds with geological focus on the U.S., European, and Asian markets.

Currently, Evonik holds stakes in ten startups and five funds including Hosen Capital. Other funds backed by Evonik include Pangaea Ventures Fund III, a venture capital fund focused on early stage cleantech investments in the U.S. market; GRC SinoGreen Fund, a private fund focused on greentech companies in Greater China; Emerald Technology Ventures, an investor in energy, water, and materials; and High-Tech Gruenderfonds, a German seed-stage investor that has investments in the animal nutrition and feed, food supplement, and cosmetic industries.

“The collaboration with VC funds and innovative start-ups compliments our open innovation strategy and creates excellent opportunities for accelerating the development of new businesses and opening new growth fields,” a spokesperson for Evonik told Feed Navigator.

 

Hosen Capital Fund III

Founded in 2010 and headquartered in Beijing, and with additional offices in Chengdu, Shanghai, and Guangzhou, Hosen Capital was spun out of New Hope Capital, the financial management arm of New Hope Group. Led by former New Hope Capital team members, Chris Wang and Alex Zhang, Hosen has $2.31 billion in assets under management and focuses on investments in companies in the food and agribusiness-related companies that are either directly located in China or are directly involved in meeting demand on the Chinese market.

Existing companies Hosen Capital’s portfolio include the Beijing-based agricultural product wholesale market, Xinfadi; Illinois-based meat processor and food manufacturer, Ruprecht Company; and Australian beef processor, Kilcoy Pastoral Company.

In the last days of 2016, Hosen Capital announced that Fund III was expected to close oversubscribed, exceeding its target of $400 million.

Previously, in August 2016, the International Finance Corp. (IFC), the investment arm of the World Bank, announced that it was committing $30 million to Hosen Capital’s third fund, claiming that the investment will not exceed 20 percent of the fund total.

Commenting on Evonik’s choice to back Hosen Capital’s Fund III, a spokesperson for the company told Feed Navigator, “We expect a trend of modernization and professionalization in animal protein production in China and other Asian markets. Our investment brings us close to these innovations, which we want to leverage in our business.”

China Signals to PE

Indeed, opportunity for China-focused agricultural investment may be entering a key window in time. China’s National Development and Reform Commission (NDRC) and its Ministry of Agriculture released a joint announcement in the last weeks of 2016 that there is a push underway to open the country’s agricultural industry to greater private equity investment as a means to prompt supply-side agricultural reforms.

The announcement was made as Chinese leaders conducted a specified annual conference tasked with reviewing the country’s agricultural progress throughout 2016 and to plan the direction of the industry for the coming years.

“With the participation of private capital, economic development efficiency will be higher,” said Agricultural Bank of China analyst, Ma Wenfeng. “But still the government needs to pay the larger share in those key areas and also strengthen supervision on the implementation of those projects.”

 

-Lynda Kiernan

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

 

 

 

 

 

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