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Oman and Japan launch $400m agri fund

The fund is majority-owned by Oman's largest sovereign wealth fund, the latest in a line of agri deals struck by SWFs.

Oman’s sovereign wealth fund is teaming up with two Japanese banks to launch a $400 million fund to invest in food and agribusinesses across the Gulf countries.

Oman’s State General Reserve Fund, the country’s largest sovereign wealth fund, will have a 37.5 percent stake in The Gulf Japan Food Fund, with Oman National Investments Development Company and Gulf Investment Corporation, which is owned by six Gulf countries, jointly holding 12.5 percent. Japan’s Mizuho Bank and Norinchukin Bank will hold the other 50 percent of the fund.

The fund will facilitate investment by Japanese companies into range of businesses from grains and feed to vegetables, milk and dairy products firms, Omani officials said in a statement. The fund will aim to invest at least 35 percent of the capital in Oman.

In a document outlining the fund, Mizuho said the new fund could double Japan’s food exports by 2018. The bank said the Gulf countries are only 30 percent self-sufficient in food and import 33 million tons of food a year.

The fund comes amid growing investment by sovereign wealth funds in agriculture. Over the last 10 years 14 state-owned funds have invested $11.1 billion in agri deals globally according to the Sovereign Wealth Center.

The Oman-Japan fund is consistent with the growing trend, particularly by Middle Eastern countries, to strike agri deals to enhance food security. “Many sovereign wealth funds are acting to protect their countries from food shortages, particularly in the Middle East,” said Enrico Soddu, author of the SWC report.

The model of two countries cooperating to run a fund focused on agri investment has a recent precedent, with China and Russia announcing in May the launch of a $2 billion agricultural investment fund, which is seeking institutional investor backing, to invest in projects in both countries.