Hosen raises $800m for latest China food fund
China-based food and agriculture specialist Hosen Capital has closed its third US dollar-denominated fund above target at $800 million.
The private equity firm said in a statement that the vehicle was oversubscribed despite a challenging fundraising environment. Commitments came from public pension plans, sovereign wealth funds, endowments, family offices, fund-of-funds, asset managers, and investment consultants. Corporates and other strategic investors also took part.
Hosen Private Equity III launched in August 2019 with a target of $750 million. Find II closed at $440 million in 2017, while Hosen raised $128 million for its debut US dollar vehicle in 2012. The strategy for Fund III is in line with that of its predecessors. Hosen will concentrate on buyout and growth deals involving food and consumer companies that are based in China or grounded in supplying Chinese consumers.
The firm's portfolio divides into consumption upgrade and industry upgrade-oriented companies. The former include: Tous Les Jours, a China bakery joint venture with Korea’s CJ Group; Real Pet Food, an Australia-based pet food producer acquired in conjunction with New Hope Group and Temasek Holdings; WangSen, a cookery college for Western cuisine; and Milan Gold, a coffee brand.
Among the firm’s industry upgrade plays are: Kilcoy Global Foods, an Australian beef supplier; Etaoshi, a B2B2C online catering and food delivery business; Houde, an egg processing specialist; Xinjufeng, a food packaging manufacturer; and Xinfadi, a wholesale distributor of fresh produce.
Alex Zhang, co-founder and a partner at Hosen, said the fundraise reflects investor confidence in the firm’s investment platform and its food and consumer thesis. "This will allow us to continue executing our investment strategy of partnering with best-in-class industry leaders and management teams to create sustainable value and realize their full potential, positioning them for future success," he added.
Hosen, which was established in 2010 and has offices in Beijing, Shanghai, Chengdu, Hong Kong and Tokyo, enjoyed an early alliance with New Hope. The China agribusiness giant anchored the firm’s RMB1 billion ($153 million debut renminbi fund in 2010. It also accounted for the bulk of the first US dollar fund, but Hosen has become more independent with each subsequent fundraise.
Agriculture – especially where it touches on the willingness of emerging middle classes to pay a premium for products that offer quality and reliability – is a longstanding private equity investment theme in Asia. More recently, food technology has come to the fore, with a focus on alternative meat producers and sustainable farming solutions.
Several food technology-focused VC firms are currently in the market, including Bits x Bites, Lever VC, Big Idea Ventures, and VisVires New Protein. Meanwhile, Investcorp has teamed up with China Resources and Fung Strategic Holdings on a more traditional food-oriented private equity fund, targeting $500 million.
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