Chinese feed manufacturer to set up 5bn yuan agri fund

An industry leader in the country's animal feed market is setting up an agricultural investment fund with a CITIC subsidiary.

China’s Guangdong Haid is planning an industrial agricultural investment fund with a hard-cap of 5 billion yuan ($760 million; €682 million), which will be managed by state-backed CITIC Industrial Investment Group subsidiary, CITIC Agricultural Investment.

The livestock and fish-feed company has reached a preliminary agreement to set up the CITIC Agricultural Fund Management company. The investment partners will put an initial 5 million yuan into CITIC Modern Agricultural Industrial Investment Fund.

The fund will have three stages, the first of which will have a hard-cap of 100 million yuan. No details of strategy were disclosed.

It will target institutional investors as well as companies with businesses in agriculture as LPs, and will have an initial lifespan of eight years with a possible two-year extension. However, further extensions may be necessary, in particular if the fund targets foreign assets, the board said in a statement.

Guangdong Haid is to invest 68 million yuan in total, beginning with a 27 million yuan contribution in the first fundraising stage.

Chinese companies can take a year or more to conduct due diligence and close deals on foreign investments.

The fund management company will charge 2 percent management fees.

Guangdong Haid is one of several Chinese agribusinesses and state-owned companies launching agricultural investment funds or strategies. In March, poultry-supplier New Hope launched a a 3 billion yuan fund to make strategic investments abroad with local investment firm Harvest Fund and the Zhejiang provincial government. This month it also emerged that Shandong Geo-mineral, a  Chinese government-backed minerals company with agricultural chemicals and biologicals subsidiaries, will buy a South Australian freshwater crayfish and wine-producing farm for more A$1.6 million ($1.2 million; €1.0 million).