Chinese agri company plans $380m supply chain fund

The fund will invest in cold chain storage, agricultural products and e-commerce.

A listed Chinese agricultural retail company with more than 13.6 billion renminbi ($2 billion; €2 billion) in assets, plans to launch a new 2.5 billion renminbi fund focused on agri infrastructure and supply chains in China.

Published Shenzhen Agricultural Products board reports show that the company intends to set up the Shenzhen Agricultural Products Circulation Industry Development Fund as a joint venture between a specially formed subsidiary, Shenzhen Express Capital Investment Management, and local private equity investment firm Shenzhen Capital, alongside other unnamed investors. 

Shenzhen Express Capital Investment Management will act as a general partner, while Shenzhen Capital, Shenzhen Agricultural Products and another group of investors will act as limited partners. Shenzhen Express Capital will own 30 percent of shares and has no relationship with Shenzhen Capital, according to the board meeting report.

Each LP will commit a third of the total raise, to be paid within two years of the fund’s launch, according to the board meeting report. The fund’s lifetime will be seven years, but could be extended by a further two years if four-fifths of investment partners approve. 

The fund will invest in the agricultural wholesale market, cold storage and cold chain construction, agricultural e-commerce and tools for environmental protection and strategic agricultural land planning across China, but must invest no less than 70 percent of its funds in Shenzhen-based companies.

Shenzhen Capital has a mandate to invest Chinese state and Shenzhen city funds into infrastructure developments, and will have an initial 5.24 percent stake in the company through direct and indirect holdings. The Shenzhen state-owned Assets Supervision and Administration Commission, which is a majority shareholder in Shenzhen Agricultural Products, will also have an influence on the fund.

Shenzhen Agricultural Products investors include Shenzhen-based life insurance company Sino Life. It has invested in 17 agricultural products wholesale markets dispersed in 13 major Chinese cities, including Shenzhen, Beijing and Shanghai, including fish and meat wholesale markets.