KKR’s Kravis: still betting on agri and food in Asia

KKR will continue to zero in on Asia’s rising middle class and its growing demand for safer, healthier food, co-founder Henry Kravis has said.

“As people are moving up the income scale, demand for safer food and better services will rise,” the US private equity firm’s co-chairman and co-chief investment officer said while speaking at a Women’s Foundation event in Hong Kong.

In the last eight years KKR, which manages $126 billion in assets, has made multiple investments in Chinese agricultural companies focusing on food safety. In 2008, the firm bought into China’s largest milk producer, Modern Dairy, alongside Beijing-based private equity firm CDH Investments. That deal enabled Modern Dairy to expand its operations from 24,000 dairy cows to 180,000 dairy cows, as well as increase its farm ownership from three to 22, according to KKR.

The firm’s subsequent investments in China’s food industry include greenfield-farm Asia Dairy, integrated pork company COFCO Meat, poultry-producer Fujian Sunner Development, and aquatic-feed company Yuehai Feed Group.

Dairy has also begun to stand out as a theme. Earlier this month, KKR India invested about $77 million in Indian dairy Kwality, to finance its milk procurement and direct sales expansion plans. In May, KKR struck its first deal in Indonesia, investing $81.2 million in agri-feeds producer Japfa Comfeed Indonesia.

“Feeding the next billion through better agriculture” is also one of the key global challenges KKR highlighted in its latest ESG and Citizenship Report. Along with adapting to climate change and investing in infrastructure, KKR said it intends to fill operational gaps in food companies, provide capital to build state-of-the-art farming equipment, and develop business solutions for safer and healthier dairy products in Asia.

Kravis emphasised that investment opportunities are plentiful even amid continued volatility and market dislocation, adding: “Investors just have to be agile.”