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IFC commits $30m to Hosen Investment Fund III

The international financial institution invested $20m in Beijing-headquartered Hosen Capital's previous agri-focused fund

The International Finance Corporation could invest up to $30 million to agribusiness and food-focused Hosen Investment Fund III.

The investment, which is subject to board approval next month, will also not exceed 20 percent of the total fund, which is targeting $400 million, according to IFC documents.

IFC could also co-invest in portfolio companies by providing them with debt and equity financing, according to the documents. They also noted that such co-investment potential would also improve access to attractive acquisitions for the fund.

IFC global industries director Alzbeta Klein told Agri Investor that China’s demographics, including a growing middle class and more demand for protein, continue to promise strong growth potential for Chinese agribusiness. Previous IFC investments in China include several investments in the pork sector.

The fund will focus on agribusiness and food processing, mostly in China. It has raised at least $48.8 million in commitments to date, including from the IFC, according to PEI Data & Analytics.

The IFC expects to see development results from HIF III’s strategy, which is to target a majority of companies that reach deep into rural areas, improve food safety through investments along the supply chain and increase China’s domestic food supply.

The investment arm of the World Bank will also provide its own investment ideas and monitor portfolio companies so that they follow international practices.

HIF III is the successor to New Hope Agriculture and Food Fund II, in which IFC invested $20 million in 2013.

Managers Hosen Capital now runs Chinese poultry and egg supplier New Hope Group’s agri investment arm New Hope Capital, which targeted $180 million for its NHAF Fund II. However, the fund is thought to have upped that target to $400 million last year.

Hosen Capital made a 2015 investment in Reuprecht Company, a beef processor and  protein producer, but does not disclose the majority of its portfolio companies.

Founded in March 2010, Hosen’s other funds include agri-focused New Hope Industrial Fund I, which closed on 1 billion yuan ($15o million; €130 million) in 2010, and NHI Fund II, which closed on $200 million the following year, according to PEI Data & Analytics.

Investors include Singaporean sovereign wealth fund Temasek, international trading company Mitsui & Co and US conglomerate Archer Daniels Midland. The firm now has at least $2.31 billion in assets under management.

In a recent interview with Agri Investor, Klein said that the institution had at least 130 agribusiness-related investments.