May 2, 2019

Hosen Capital is looking to raise a third dollar-denominated fund of up to $1 billion to invest in Asian food companies.  The fund will also be its biggest, doubling the size of its second dollar-denominated fund at $460 million, and dwarfing its first which stands at $130 million.

Currently, Hosen’s first fund has realized four-fold returns, and more than half of the capital from its second fund is committed with expectations of similar earnings to its first – good news for its sponsors that include Temasek Holdings, New Hope Group Co., and Mitsui & Co.

Founded in 2010 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 historically focused on investments in both domestic and foreign food and agribusiness-related companies along the value chain with China exposure through consolidation and growth strategies.

Over the past decade, Asia’s private equity has doubled in share, according to data from Bain and Co. reports Bloomberg, now accounting for 26 percent of global assets. This growth, in part could be a result of policy shifts from Beijing.

Indeed, China-focused agricultural investment may have entered a key window of opportunity in recent years. China’s National Development and Reform Commission (NDRC) and its Ministry of Agriculture released a joint announcement in the final weeks of 2016 announcing a push to open the country’s agricultural industry to greater private equity investment as a means to prompt supply-side agricultural reforms. In the announcement, the two bodies stated that there will be more open support of private equity capital being invested in crop and livestock production, infrastructure, and the improvement of agricultural land, reports Reuters.

With a population that accounts for nearly 20 percent of the world’s total, but holds only 7 percent of the world’s arable farmland, China became the world’s top importer of agricultural goods by 2011, and remains in a constant state of demand outstripped domestic supply.

So challenged, Beijing has pledged that by 2020 the government will create more than 53 million hectares of arable farmland, ramp up investment in agricultural technology, and will initiate training programs for farmers.

This ideology designed to push the modernization of one of China’s top strategic industries, together with China’s track record of subsidizing its agricultural production systems, point to an upward trend for opportunities and the liberalization of a lucrative investment channel for agricultural investors in the country in the coming years – something that will likely also drive the food industry.

Amid such a bullish landscape, Wang tells Bloomberg that he expects a wave of Asian companies to be coming on the market, citing an influx of business people from Taiwan to China in the 1990s, who are now looking to exit and hand control over to new investors.

-Lynda Kiernan